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A lien refers to a legal claim or right against a property. It provides security, allowing individuals or organizations to take property or other legal actions as a way of satisfying some debts. Usually, it is part of the public record, providing information about any existing debts. For instance, if you intend to purchase a house, you pledge to repay the seller.

Your lender may require you to provide more than a signature. This is because they may have little leverage if you stop paying the balances. When you fill in some documents with local authorities, they become lienholders on your house.

This improves their chances of getting repaid. Lien priority is the order in which creditors can be paid in a foreclosure. For example, if a certain lien has a “priority” over another, it’s paid before the other. Generally, they are prioritized in the order they are recorded.

Mechanic’s Liens

The liens are used by contractors who haven’t been paid for the improvements they may make to a property. For example, they may become lienholders if a homeowner fails to pay the charges for remodeling or improvements.

You may face the claim even if you are not the one who missed payments. The materials supplier can be the lienholder if the contractor fails to pay for supplies. This will enable them to recover the debt.

Mortgage Lien

Some lenders may place the lien to take your property if you fail to honor your debt. Usually, individuals mix mortgages with the actual loans used to buy a property. Note that a mortgage is not a typical loan. Instead, it is an interest in a real property held by a lender as security if a borrower fails to pay back the money they owe.

Tax Lien

A tax authority can place a lien against your home for unpaid taxes. A Notice of Lien is filed with the county officials. For commercial properties, this is done with the secretary of state. By doing so, the owners are not allowed to refinance, sell, or transfer their properties unless the debt has been repaid.


When an obligation is met, lienholders can file a release with the country recorder where it was filed. If this is not done, owners must provide proof of satisfaction to the authorities and request the release of the lien.

Lien’s Impact on Credit

Credit-monitoring agencies can record liens, which has a direct impact on your credit rating. You may have a hard time trying to apply for secured or unsecured loans. Therefore, it is in your best interest to satisfy liens within the shortest time possible.