Liens are something not often talked about, although they should be. Liens can make your life a huge mess! Or in some instances be a life saver. In short, liens are a form of security.

What is a Lien?
Definition: A lien is a form of security interest granted over an item to secure the payment of a debt or performance of some other obligation. A lien serves to guarantee an underlying obligation. Usually that obligation is the repayment of a loan of some sort. If that obligation is not met, the creditor may be able to seize the asset that is the subject of the lien.

Example: The most common types of liens are those that are placed on vehicles or real estate. In the case of a vehicle, The individual purchases the vehicle and pays the seller using the funds from the bank, but grants the bank a lien on the vehicle.  If payments or obligations aren’t met the bank can repossess the car because they hold a lien on it.

What is a Real Estate Lien?
Real estate liens are financial claims against property. A mortgage is the most common form of real estate lien. This lien is filed by a lender in order to secure the lender's long-term real estate loan.

Voluntary Lien vs Involuntary Lien
Liens can be divided into two categories: Voluntary and Involuntary liens. Then after that divided into two more categories: Specific and general.

Voluntary liens are created by a contract between the creditor and the debtor. The most common type is a mortgage, which is essentially a bank loan that is secured by the property itself. Banks give home buyers money in exchange for a promise to pay it back, normally with additional interest and costs.

The bank, of course, retains ultimate legal ownership of the property until the loan is paid off. Voluntary liens like mortgages are easily found and quantified; after all, you are most likely the person who agreed to its terms. At some point, you as the homeowner agreed to the terms of the mortgage and you (theoretically) have a plan for when you will pay it off and gain ownership of the property outright.

Involuntary liens are a tad bit different. Involuntary liens aren’t created by the homeowner. It is a claim imposed against a property without the consent of its owner. Involuntary liens are placed usually by government revenue authorities for unpaid duties or taxes. The next division of liens is by specific or general. The concept is pretty simple. A specific lien attaches to only one property. A general lien attaches to a number of properties.

How to Remove a Lien
Sadly removing a lien can be complex and time consuming. Obviously the first option is to pay it off. If that is not an option individuals can try and settle and meet in the middle with the costs. If individuals believe the lien is false or fraudulent legal actions may be required to resolve the issue.

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