A legal claim against a property that must be satisfied before the property can be sold or refinanced free and clear.
Full Definition
A lien is a creditor's legal right to a property as security for a debt. Your mortgage creates a voluntary lien — you willingly pledge the property as collateral. Other liens can be involuntary: mechanic's liens (filed by contractors for unpaid work), tax liens (filed by the IRS or state for unpaid taxes), judgment liens (from court rulings), and HOA assessment liens. Liens are recorded in public records and create a cloud on title. A property's title must typically be clear of all liens (except the new mortgage) before a sale or refinance can close. Title searches and title insurance protect buyers from undiscovered liens. Multiple liens are prioritized by recording date — the first recorded lien is senior to later ones.
Related Terms
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