This is the latest entry in BeenVerified’s legal term library designed to help you better understand public record information, criminal records and related terminology. The information in this article is provided for informational purposes only and does not constitute legal advice.
Liens live in the world of debt and serve as claims against property or money owed for services rendered. What types of liens are there, how are they enforced and are they public record? Read on to find out.
A lien can be defined as “any official claim or charge against property or funds for payment of debt of a debt or services rendered,” according to Law.com. Liens can therefore be applied to numerous situations, such as unpaid medical bills, auto work and contracting work done to your home.
Mortgages and auto loans are both types of liens, in that they are claims on a property (or car) by a financial provider. If these obligations go unpaid, then the creditor may reclaim the house or car in question.
A common scenario when a lien occurs is that a person is forced to have more work done than they budgeted for and simply can’t afford to not have the work done. This is why liens in the medical world are extremely common. Some times a person has no choice but to have an operation done in an emergency situation.
Another common situation when liens are applies are disputes about work done. This is common enough in both the world of mechanics and home contractors that there are special types of liens named for the situation, according to Law.com. Disagreements often occur over the expense and necessity of certain auto repairs.
Customers employing home contractors often dispute the quality or completeness of the work, refusing to pay and leading to a home contractor lien placed against the customer’s home. In addition to having potential financial consequences, this serves to ward off other potential contractors from serving the customer’s home.
Other common scenarios where a lien can be served to an individual is for unpaid taxes and when a landlord’s lien against a tenant’s property for unpaid rent or damages to the rented property.
Liens are enforced by state or local courts (with the exception of tax liens) and can lead to the forced sale of property and direct payment of funds to the individual or group that has the claim, according to Investopedia. Typically, lines are charged off in the order that they appear, but tax liens from the IRS are given priority.
Liens can be enforced against any type of property or assets that a person has including their home, cars and bank accounts.
An individual who is able to satisfy a lien with his or her creditor should ensure that the agreement is accepted and confirmation sent in writing, according to the Free Dictionary by Farlex. Many types of liens are part of the public record, including tax liens and liens on a property.