Types Of Liens In Real Estate
Property Lien Examples
There are different types of liens that creditors can hold. It is easier to deal with a lien in bankruptcy if you know the kind of lien you are dealing with. An experienced bankruptcy lawyer can help you through the complex bankruptcy process.
What Are The Type Of Liens You May Encounter?
Statutory Lien On Property
Here are the types of liens you may encounter:
- Voluntary liens: These are liens that you agree to give a lender. For instance, you agree to put a lien on your property when you sign a mortgage agreement or car loan agreement.
- Non-consensual liens: Sometimes a court can grant a creditor interest in your property to secure a debt you owe. This means a non-consensual lien is placed on your property without your consent and is therefore an involuntary lien.
How Creditors Obtain Non-consensual Liens
What Are The Different Types Of Liens
The two categories of non-consensual liens are statutory liens and judicial liens. Statutory liens are granted by law while judicial liens are granted through court action. Both of these liens can result in the following:
- A reduced paycheck
- Your property getting sold
- Your bank account will be tied up
Types Of Statutory Liens
Examples Of Specific Liens
Statutory liens are created by the operation of state or federal law. When a creditor has a statutory lien on a property, they own part of that property. That means the property can be sold to satisfy the debt you owe the creditor. The following are types of statutory liens:
- Mechanic liens: When you hire someone to work on your property and fail to pay them, that person can secure an interest in that property. For example, if you have had your deck repaired or replaced and failed to pay for the work, a mechanics lien can be placed on your property. You can contest the lien if the work wasn’t done or if it wasn’t done properly.
- Landlord liens: Landlord liens are used by landlords to recover unpaid rent, especially in commercial or business property. The lien is placed on inventory or the equipment used by the business. But there are strict regulations that the landlord must meet to be able to exercise liens rights.
- Tax liens: Tax authorities can have liens placed on your property if you fail to pay your taxes. The law spells out how this can be done. Depending on the tax debt you owe, a tax lien can be placed on a specific property or everything you own.
- Condominium association liens: Condo liens categorization as statutory liens depends on the state. So, talk to your lawyer for more information.
Judicial Liens
A Mortgage Lien Is A Type Of
Unlike statutory liens, judicial liens are created by court action. Both state and federal law offer guidance on situations where judicial liens are granted and what type of property these liens can attach to. They also specify how these liens should be enforced.
The different types of judicial liens include:
- Judgment liens: When a creditor files a lawsuit against you for not repaying your loans, the court may grant the creditor the right to possess your property. This ruling is called a judgment lien.
- Garnishment liens: This is a ruling by a court that allows a creditor to take money from a debtor’s bank accounts or from their wages.
