Perfected Lien

DEFINITION of 'Perfected Lien'

A security interest in the collateral that is used to secure the performance of a debt that is protected from third-party claims. A perfected lien for real property must be filed with the correct legal authority. Perfected liens for real estate are achieved when the mortgage deed of trust is recorded in the land records of the appropriate municipality.

BREAKING DOWN 'Perfected Lien'

Perfected liens on personal property are created when the lender files a Form UCC-1 financing statement with the correct authority (usually the office of the secretary of the state or the office of the county recorder). This statement will outline the type and location of the collateral used to secure the loan. The filing statement gives the lender precedence in the collection process if the borrower defaults.

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    Find out about the steps an investor must take to invest in tax liens, along with the potential benefits of doing so. Read Answer >>
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