Legal Definitions - lien account

A lien account is a detailed financial record maintained by a party who holds a legal claim (known as a lien) against another person's property. This account tracks all monetary transactions and obligations related to the debt that the lien secures. It includes information such as the original amount owed, any payments received, interest charges, fees, and the current outstanding balance. Essentially, it's the ledger for the debt that gives the lienholder a right to the property if the debt isn't satisfied.

• Home Mortgage

  Scenario: When a bank lends money to someone to buy a house, the bank places a mortgage lien on the property. This lien gives the bank a legal claim to the house until the loan is fully repaid.

  Lien Account: The bank maintains a lien account for that mortgage. This account records the initial loan amount, every monthly payment made by the homeowner (detailing principal and interest portions), any late fees, escrow payments for property taxes and insurance, and the continually updated outstanding balance. It shows exactly how much is still owed on the house.

  Illustration: This account clearly shows how much the homeowner still owes on the loan that is secured by the house, demonstrating the financial tracking aspect of a lien account for a long-term debt.

• Auto Loan

  Scenario: A person takes out a loan from a credit union to purchase a new car. The credit union holds a lien on the car's title until the loan is fully repaid, meaning they have a claim on the vehicle if payments stop.

  Lien Account: The credit union keeps a lien account for this auto loan. It details the original loan principal, the schedule of payments, the interest accrued over time, any additional charges for services like extended warranties financed with the loan, and the remaining balance that needs to be paid before the lien can be released and the car's title transferred free and clear to the owner.

  Illustration: The account provides a complete financial history of the debt secured by the vehicle, showing how the credit union tracks the obligation tied to its lien until the car is fully owned by the borrower.

• Contractor's Mechanic's Lien

  Scenario: A homeowner hires a roofing contractor for a major repair. After the work is completed, the homeowner disputes part of the bill and doesn't pay the full amount. The contractor then files a mechanic's lien against the property to secure payment for the outstanding work, giving them a legal claim against the house.

  Lien Account: The contractor would maintain a lien account detailing the original agreed-upon cost of the roofing project, any partial payments received from the homeowner, the specific amount still owed, and potentially any interest or legal fees incurred in pursuing the lien. This account would be used to demonstrate the exact debt amount if the contractor needed to enforce the lien.

  Illustration: This account serves as the official record of the unpaid debt that the contractor's lien is designed to enforce, providing a clear financial breakdown of the claim against the property.