Nov 23, 2016

What Is a Lien?

A lien is a legal right a creditor can place on a debtor’s property to ensure the person pays back their debt in full ( As a legal right, creditors can sell the property if the debtor fails to meet the financial obligations of a loan or contract made with the creditor.

How Does It Work?

Liens are very valuable and important matters of business, and can take a long time to earn. When you place a lien on a property, that lien gives you legal rights to the property and the authority to sell the property as repayment to what is owed you (

Obtaining a lien on a property takes time and detailed proof that it’s justifiable. First, you must prove that you have a debt that has not been paid to you by a debtor. This can be proved with receipts, bills, and letters. Second, you must have a court order instructing the debtor to pay what is owed. Upon court filing, the debtor must answer and explain why the debt is now owed. If no debtor evidence is found, then the court will make a judgment in your favor.

The third thing you must do is file the court judgment and identify assets of the debtor. This is usually acquired during the court filing. You must also reach out to state and federal organizations in case the debtor’s property is registered with them. Finally, you have the legal right to seize the property assets and sell them, using the proceeds to satisfy the judgment ( This can be done via auction or a Sheriff’s sale.

house-calculatorWhat Can Creditors Put Liens On?

While liens can be placed on a variety of items, some of the more common properties are with automobiles and houses. For example, if a person decides to buy a house and needs money from a bank to pay for the house, then they can agree to have a lien on the house as collateral. If the person stops making mortgage payments and paying the bank back, the lien allows the bank to seize the house and sell it to repay the debtor’s loan. On the other hand, if the debtor pays the bank back in full, then the bank will release the lien. (

Do Liens Have Time Limits?

A lien’s time limits are usually determined by a state law, which can be several years or months. Most time limits begin the day a creditor wins the property lien in court ( The time limit allows the creditor to find the best way to use the property to get back what is owed to them.


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