Lien
A legal claim against a property that must be satisfied before the property can be sold or refinanced.
Definition
A lien is a creditor's legal right to a debtor's property as security for a debt or obligation. The most common lien on real estate is the mortgage itself — a voluntary lien placed by the borrower. Involuntary liens include tax liens, mechanic's liens from unpaid contractors, and judgment liens from lawsuits. Liens are recorded in public records and must be resolved before a property can transfer clear title. A title search during the closing process identifies any existing liens. Properties with unresolved liens are difficult or impossible to finance or sell.
Related Terms
Title Insurance
Insurance that protects the buyer and lender against claims on a property's ownership history.
Subordinate Financing
A second or lower-priority loan taken in addition to the primary mortgage.
Due Diligence
The investigation and analysis an investor conducts before purchasing a property to verify all material facts.
Closing Costs
Fees and expenses paid at the closing of a real estate transaction beyond the purchase price.
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