Need to know more about a real estate lien? Here is a high level view on what they are, why they exist and how they work.
What is a Property Lien?
The short answer is sometimes the best. A property lien is a legal claim on property that allows the lien holder to get access to the property if debts aren’t paid.
So for example, let’s say someone holds a mortgage but hasn’t paid the bill for a few months. That means the lender is being shorted thousands of dollars they’re owed. They won’t be very happy about that, so they might put a lien on the property.
The term property doesn’t just apply to a house. It can also be something like a car or boat.
Keep in mind that creditors usually use a lien as a last resort. They prefer to use other methods, such as late fees, to make sure they collect what they’re owed on time.
How Does a Real Estate Lien Work?
Once a creditor decides to go down this path, they need to file a lien through the local county’s records office or the respective state agency. Every state and county has different regulations around real estate liens, so the process will vary depending on where you live.
If the creditor is given approval of the lien, that essentially means they’re looking to foreclose the property. The borrower hasn’t been holding up their end of the bargain by paying the full bill on time. To recover the money they’ve loaned to the borrower, the creditor will foreclose the home and try to get their money back.
If the lien is approved and the borrower is able to come up with the money to pay, the creditor probably won’t move forward with foreclosing. But this doesn’t happen often. Usually by the time a first lien has been granted, the creditor will possess the property and sell it off.
What Should You Do if a Property Lien is On Your Home?
The short answer is: pay your bill ASAP. As we mentioned earlier, a creditor usually goes down the path of a property lien as the last resort. It’s not a fun process to repossess a home that a borrower purchased. If it’s gotten to this point, it means you’ve missed a few payments and it’s almost the end of the line.
Do what you can to pay the mortgage. See if you can borrow money from friends or family. Work side jobs to earn the money. Sell a few luxuries around the house that you really don’t need right now.
If you don’t come up with the money, you may lose the home to the creditor. Feel free to give us a call at 714.456.9118 to see how we can help.
How Do You Initiate a Real Estate Lien?
Are you on the other side of the fence? Maybe you’re a credit union or bank who needs to file a property lien against a borrower who’s behind on their payments. In that case, give us a call at 714.456.9118. We can walk you through the process.