DEFINITION of 'Construction Lien'

A claim made against a property by a contractor or other professional who has supplied labor or materials for work on that property. Construction liens are designed to protect professionals from the risk of not being paid for services rendered. Remedies vary from state to state, and can differ depending on whether the property in question is real property or personal property.

BREAKING DOWN 'Construction Lien'

If the property owner is not satisfied with the work done by the contractor or professional, simply not paying the bill will not resolve the issue. Instead, the property owner should approach the contractor about the quality of service and what can be done to rectify the issue. If the contractor has used subcontractors and has not paid them, the homeowner could still be on the hook for the payment, and the lien could be used to ensure payment is made.

RELATED TERMS
  1. Property Lien

    A property lien is a legal claim on a tract of real estate granting ...
  2. Tax Lien Foreclosure

    The sale of a property resulting from the property owner's failure ...
  3. Lien

    The legal right of a creditor to sell the collateral property ...
  4. Tax Lien Certificate

    A certificate of claim against property that has a lien placed ...
  5. Personal Property

    A type of property which, in its most general definition, can ...
  6. Form 4797

    A tax form distributed by the Internal Revenue Service (IRS) ...
Related Articles
  1. Investing

    Your Property Tax Assessment: What Does It Mean?

    The amount of a property tax bill is based on the property’s value, the exemptions it qualifies for, its use and the local property tax rate.
  2. Investing

    How Does a Lien Work?

    A lien gives a creditor the legal right to seize and sell property, then use the proceeds to pay off a borrower’s debt.
  3. Taxes

    Sell Your Rental Property For a Profit

    Being a landlord can be taxing, especially when you want to sell. Find out how to reduce your burden.
  4. Investing

    What You Should Know About Real Estate Valuation

    Anyone involved in a real transaction can benefit from gaining a basic understanding of the different methods of real estate valuation.
  5. Personal Finance

    State Laws Dictate Division Of Joint Property

    In breakup, divorce or death, community or common law will determine how property is divided.
  6. Investing

    The Guide to Investing in REO Properties

    Real estate owned properties present a unique investment opportunity but there are some specific challenges to be aware of before diving in.
  7. Taxes

    How Does a Tax-Free Exchange Work?

    In regards to the sale of property, particularly in real estate, a 1031 exchange is increasingly being recognized for its tax benefits to investors of all levels.
  8. Insurance

    Encumbrances And Nonpossessory Interests In Real Property

    Learn about nonpossessory interests and the various forms of encumbrances.
  9. Taxes

    10 Things to Know About 1031 Exchanges

    Real estate swaps grow popular, but traps are many. Beware new rules on vacation homes.
RELATED FAQS
  1. How can I invest in tax liens?

    Find out about the steps an investor must take to invest in tax liens, along with the potential benefits of doing so. Read Answer >>
  2. What types of liens are seen as good and which are bad for my credit?

    Understand what a lien is and what types of liens are most common for individuals, and learn which types of liens are good ... Read Answer >>
  3. What is the difference between a lien and an encumbrance?

    Understand the legal terms ''lien'' and ''encumbrance,'' and learn the significant distinction between these two essential ... Read Answer >>
Trading Center