WHAT IS A Home Lien

Home lien is a term for a legal claim placed on a home.


A home lien is the legal claim on physical property by a creditor. If a mortgage lender, the federal government, or anyone who has legal interest in the property places a lien on a home, the lien enters the public record in the county where the property is located. When a home lien is placed on a property, it is more difficult to sell, to obtain a mortgage or to refinance the property. When the homeowner meets the outstanding financial obligations, the lien will be lifted, and the owner will more easily be able to sell or refinance the home. The most common forms of liens on a home include tax liens, mechanic's liens and judgment liens. A tax lien can lead to a sheriff's sale of the property.

Individuals shopping for a home should pay pay special attention to the property, double checking the records for a home lien. A lien can delay the homebuying process, and any existing lien can make it difficult for the potential homebuyer to qualify for refinancing. It is important to check the public record for a piece of property in order to see if it is encumbered. Even if the financial obligation causing the home lien has been taken care of, the public record may sometimes be out of date. If a bank or lending institution sees the history of a home lien on a public record, there is a higher probability of the that institution delaying the purchase until they ensure the property is fiscally sound.

Homeowners, Creditors, and Home Liens

As the legal right granted by the owner of property, a lien serves to guarantee an underlying obligation, like a mortgage. For example, an individual takes out a mortgage in order to purchase a new home. The individual, in order to receive the loan from the bank, pledges their home as collateral. That bank now has a lien on the home, or a legal right to take the home if the individual does not pay their monthly mortgage. The individual is now the homeowner, but if they default on their mortgage, the bank has the legal right sell the home. Now if the homeowner wants to sell the house, in order to pay off the debt they need the consent of the bank or lien holder. If the homeowner cannot meet the terms of the mortgage contract, and pay the loan, the bank can begin the foreclosure process.