Legal Definitions - lien

A lien is a legal claim or right held by a creditor over a debtor'sproperty. It serves as security for a debt or obligation. This means that if the debt is not paid, the creditor may have the right to take possession of or sell the property to recover the money owed. The lien typically remains attached to the property until the debt is fully satisfied.

Here are some examples to illustrate how a lien works:

• Home Mortgage: When you purchase a home with a loan from a bank, the bank places a lien on your property. This means the bank has a legal claim on your house until you fully repay the mortgage. If you stop making your mortgage payments, the bank, as the creditor, can enforce its lien by foreclosing on the property, selling it, and using the proceeds to recover the outstanding debt.

• Unpaid Car Repairs: Imagine you take your car to a mechanic for extensive repairs, and the bill comes to $2,000. If you are unable or unwilling to pay for the repairs, the mechanic might place an "artisan's lien" on your vehicle. This gives the mechanic the legal right to keep your car in their possession until the repair bill is paid. In some jurisdictions, if the debt remains unpaid for a significant period, the mechanic could eventually sell the car to cover the cost of the repairs and storage.

• Government Tax Lien: If a property owner fails to pay their annual property taxes to the local government, the government can place a "tax lien" on the property. This legal claim signifies that the government has a right to the property to secure the unpaid tax debt. If the taxes remain unpaid, the government may eventually sell the property at a tax sale to collect the overdue funds.