Understanding liens

Ever heard of a lien? It’s probably a good thing if you haven’t. A lien, with regards to your home, is a declaration against your home, stating you owe a creditor money. Liens take two forms, voluntary and involuntary. Involuntary leans have more to them since there are more ways to get them.

Voluntary Lien

It’s not unheard of for money lenders to ask their customers to put a lien on their property. You can think of it as an incentive. Should an individual not make payments on a home or vehicle, the creditor can foreclose on the home or repossess the vehicle. This is a best-case scenario. Outside of voluntary liens for money borrowed on property and vehicles, there is another voluntary lien most of us hope no one need go through.

Family Law Real Property Lien

The concept is easy enough. Should you need to retain a lawyer for divorce proceedings, and simply don’t have the money, it’s possible they might allow a FLARPL (Family Law Real Property Loan}.Basically, if you have enough equity, a lawyer might agree to work for you assuming they will get paid upon the sale of your property.

Involuntary Lien

The name doesn’t leave a lot to the imagination. This lien exists after a creditor has taken legal action against the borrower. There are several common types of involuntary liens.

Property Tax Lien

Should you not pay or refuse to fork over property tax, the government has the right to sell your property in order to make up the money owed. According to Attorney Cara O’Neill, it is possible to “pay the taxes and costs and get your property back even after the ‘sale.’”

Tax Lien

This is very similar to a property tax lien. In short, the government can put a lien on your assets should you not pay your taxes, e.g., your income tax. According to Investopedia, this is “a last resort to force an individual or business to pay back taxes.”

Mechanic’s Lien

This is also called the materialman’s lien. This will happen if you’ve had some renovations done to your home and haven’t paid the contractor. The contractor could force the sale of your home should they win their lawsuit against you.

Child Support Lien

If you owe a substantial amount in child support payments, it’s possible for your ex to put a lien on your property. Until you sell or refinance, a forced sale is implemented, or you pay your back debt, the lien will remain and could impact your ability to, for example, refinance.

Derek San Filippo

Derek San Filippo

Derek is a freelance writer who spends his off time either working with his rescue animals or writing children’s books. He lives in San Diego with his beautiful wife ... Web: www.financialfeed.com Details