Lien

Definition

A legal claim by a party against another party for satisfaction of a monetary claim.

Purpose

Liens are used to secure payment of a debt or obligation. They grant the lienholder a legal right to seize or retain property until the debt is satisfied. This provides assurance to creditors that they will receive payment for services rendered or debts owed.

Examples of Use

• Mechanic's lien: Placed by contractors or suppliers on a property for unpaid construction work or materials.
• Mortgage lien: A claim by a lender on a property used as collateral for a loan until the loan is paid off.
• Tax lien: Imposed by a government entity for unpaid taxes.

Related Terms

• Foreclosure: The legal process by which a lender seizes a property due to nonpayment of a mortgage.
• Encumbrance: A claim or liability attached to a property, such as a lien, that affects its value or use.
• Judgment Lien: A lien placed on a property as a result of a court judgment.

Notes

• Liens can affect the ability to sell or refinance a property.
• They must be resolved or paid off for the clear transfer of property ownership.
• Filing and enforcement of liens are subject to specific legal procedures and timeframes.