Moneyzine
Contents

Lien

Moneyzine Editor
Author: 
Moneyzine Editor
1 mins
September 25th, 2023
Advertiser Disclosure

Definition

The term lien is used to describe the legal right given to a lender to take, or sell, property of a debtor as security or collateral against payment of the debt. Once placed on a property, a lien will remain in effect until the loan is paid in full or satisfied.

Explanation

Generally, there are two parties to a lien, the owner of the property is known as the lienor, while the person who has claim to the property is known as the lienee. Placing a lien on property reduces the risk to the creditor (lienee). It is a way to ensure the borrower (lienor) repays the loan on time.

As is the case with a deed, a lien can take on several specialized forms:

  • Assessment Lien: municipalities making improvements to property may seek an assessment lien to ensure future tax payments will be used to pay for the improvements.

  • Mechanic's Lien: also referred to as a contractor's lien, protects those individuals supplying labor and / or materials to improve a property.

  • Judgment Lien: a lien placed on an asset to ensure payment of a legal claim against another party.

  • Tax Lien: a legal lien on a property for taxes due, sometimes sold at county auction.

There is also a hierarchy for the payment of liens as described below:

  • First Lien: takes precedence over all other liens or claims to a property.

  • Junior Lien: subordinate in priority relative to other liens.

Related Terms

Related Content

  • What Can Help You Meet Your Budget While Shopping for Important Items?
    Budgeting while ensuring you don't compromise on quality can seem daunting. Whether filling your pantry, updating your wardrobe, or keeping up with the latest tech, smart shopping strategies are crucial for keeping your finances in check.
    April 2nd, 2024
  • How to Make a Million Dollars in 10 Years
    Truthfully, this title should actually be “How to Make a Million Dollars in 10 Years Without Going Into Debt", but that is just getting a little too winded for my liking. It’s true though!
    November 18th, 2024
  • How to Apply Maslow’s Hierarchy to Your Money This Year
    You might vaguely remember your psychology teacher talking about Maslow. He pointed at a picture of a triangle as you nodded off in the back of the school room.
    November 18th, 2024
  • How to Tackle Multiple Savings Goals
    When there’s only so much money to go around, there are often multiple savings goals competing for your money. Think of the young professional who’d like to get a more reliable car, buy a house, and save for retirement. Or consider the young family that’s saving for college, retirement, and a bigger house.
    March 22nd, 2024
  • The Countdown to Early Retirement: 10 Expenses to Eliminate
    Dreaming of waving goodbye to the daily grind five years ahead of schedule? The road to early retirement is paved with more than good intentions; it requires a meticulously crafted strategy with surprising twists. It's not solely about what you should be doing—like diligently saving a portion of your income or investing wisely—but also about what you need to stop doing.
    March 22nd, 2024

Contributors

Moneyzine Editor
The Moneyzine editorial team consists of writers and content specialists with diverse backgrounds.
Moneyzine 2024. All Rights Reserved.