Simply put, a lien (pronounced lean) is a debt or claim that is attached to a real estate property as collateral. One of the most common liens in real estate is a mortgage loan. In the event that a borrower isn’t able to make the monthly payments on their mortgage, the financial institution that is supplying the loan could take possession of the property to satisfy the debt that is owed to them.

Other types of liens could be the result of a lawsuit (judgment lien), or let’s say you remodeled your home but didn’t pay the contractor. They could go to court and have a judgment filed against you leaving your home and other assets subject to auction to pay back the debt owed to the contractor (mechanic’s lien). Tax liens can also be placed on a property for any unpaid taxes.

How do you get rid of a lien? By paying off the debt in full. But don’t be scared of liens thinking you must rid yourself of all debt in order to be safe. Keep in mind, most homeowners have a lien on their property from their mortgage loan. If you do choose to pay any debts off in full prior to when final payment is due, first speak with your lending institution to ensure you will not have any prepayment penalties. 

Written by Blair Hayes, REALTOR®