Lien Definition

What Is Lien?

When someone does work or provides a service on your home, lien is the legal claim of one person against another person’s property until debt is paid, usually to secure the payment of a debt or performance of some duty. 

It basically means that you get to store your lien against their house until they pay for what they did to yours.

The lien can be lodged by an individual contractor working on your  house or a lien placed for a contractor who did work on your home. The lien may be placed by someone who worked for the owner of the property.

Lien can also be filed against your car in case if anyone fails to pay money they owe for a car repair. The lien will be removed from the vehicle title only if the lien is satisfied.

Getting the Right Lien for Your Needs

Before liening a property, homeowners should be aware of the lien type. Whether it is a contract lien or material lien, you must know the difference between them to avoid any future troubles.

Contract Lien

When there is a contract between the service provider and homeowner or property owner, this lien gives the person providing the service lien against the property until they are paid.

For example,  say you hire a contractor to paint your basement. The lien is filed against the property until the debt is paid in full through either cash, check or credit card.

Material Lien

Sometimes lien can also be placed by material suppliers. If you are buying supplies for the work that you are having done on your house or property, then their lien will  attach to your house until the debt is paid.

Benefits of Getting Lien on Your Property

You can use lien as a security to take over the property. When you have a lien on your property, it gives you a way to pay someone that has done work or given services for your house.

This lien becomes a claim upon the home and place of business until all lien is paid in full. It becomes effective for one year after a lien is placed against property.

Lien can also be a big benefit for a homeowner. When a lien is placed against the property by a contractor, it will give you time to save up money to pay the bill. Most lien only have to be paid off once the house has been sold or refinanced.

It also protects homeowners from being sued if they cannot pay the lien.

Who Can Put Up Lien Against Your Property

Any individual or company that has provided services or goods on your property can lien your home. Contractors who have done work on the house or any supplier of materials for the construction of the building is eligible to lien against it.

If you are hiring someone for a lien on your property, you can search vendors in lien packs. Lien packs are lien templates that also come with instructions on filling forms as well as filing lien online.

How to Lien a Property

To lien a property, you need to visit the office of the local recorder and tell them that you want a lien on your property. Then, follow these steps:

1. You will be asked for the contact information of who is doing work on your property.

2. You will be asked to provide a lien statement. It is a simple document that can be downloaded from the internet or made by using the Lien Statement Template found in lien packs available online free of cost.

3. You will have to pay a filing fee when you lien property. Filing fees range from $15 to $30 and the lien will be on the property for years.

4. You can also lien properties in bulk by purchasing lien packs. Lien packs are bundles of lien templates that come with instructions on filling forms as well as filing them online.

5. If you do not file a lien within 5 years of the lien, then the lien will become invalid.

When Do I Need to Worry About Liens?

Even though liening a property is beneficial for homeowners, there are also disadvantages.

Homeowners must lien their property when they can’t afford paying the lien amount in full at once. They cannot lien it after the lien period has expired. 

If a homeowner does not pay a lien within the lien period, the lien will become invalid and the lien holder can’t get his money.

Also, liens must be paid off when refinancing the property or selling the property. For this reason, lien can affect a homeowner’s credit rating since lien is noted against the homeowner’s credit history and lien can also affect your ability to secure loans for future use.

What Are My Options if I Have a Lien on My Property and Can’t Afford the Mortgage Payments Anymore?

If lien has been placed against your property and you cannot afford the lien payments,

  1. You can reach out to the lien holder and negotiate a payment plan with the lien holder. If the lien holder is a contractor, he may agree to monthly payments.
  2. If the lien holder refuses to negotiate a payment plan with you, you can try selling the lien on a lien sale auction website or reach out to a local realtor. If the lien  amount is more than the lien value of your property, the lien holder will be forced to accept a lien sale offer.
  3. There are also some legal remedies available to lien holders who cannot pay lien in time if they have been liened by homeowners. Lienholders may be able to  lien lienholder’s property, lien lien holder’s bank accounts, garnish lien debtors’ paychecks and even foreclose on lien debtors.
  4. Lastly,  the lienholder can lien the debtor’s car or any other property to get lien money.

Final Thoughts

A lien is a claim or charge against someone’s property to secure the repayment of a debt. A lien allows a person holding the lien to retain legal ownership of a property while allowing someone else to use it until the lien is paid off.

A lien can be placed on anything from homes and cars to boats  and aircraft.

The lien can be put on a personal property or real estate and the lien holder has the legal right to deny someone access to their liened property until they are paid for whatever services, materials or labor were provided.

When you lien a person’s home or car, that person is prohibited from selling or refinancing it. If lien is liened against a home, the lien holder also has the right to evict occupants from the liened property.

A lien is a lien against your home or property for the repayment of a debt. Lien can also be lien on someone’s property to keep them from selling it until the lien is paid off.
Lien provides lienholder with lien rights, lien lien debtor from refinancing or selling the liened property, lien lien debtor from excluding lien on their bankruptcy protection.
Any person or business with a valid claim can place a lien on your property. If you have unpaid credit card bills, unpaid medical bills or any other debt, these creditors may be able to lien your property.
Lien can be liened on your property by the lienholder sending a lien claim to lien debtor (you). You will receive lien notice via mail. Then, you have to act within 30 days according to lien terms and conditions. If you do not file a lien within 5 years, the lien expires.
When you buy a home or car, the lien holder may lien your property. Lien further allows the lienholder an opportunity to collect payment from you without having to resort to taking legal action against you.

True Tamplin, BSc, CEPF®

About the Author
True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.