A lien is a legal claim against property, often used to secure repayment of a debt or performance of an obligation.
A lien is a legal claim against property, often used to secure repayment of a debt or performance of an obligation.
A lien matters because it can affect whether a borrower receives clean title at closing and whether the lender is comfortable taking a mortgage position on the property.
The term also matters because liens are not just technical legal clutter. They can delay closing, complicate payoff figures, or affect who gets paid from a property transaction.
Borrowers usually encounter liens during the title review and closing phase, when the transaction is being checked for ownership and claim issues.
Liens can also matter later in refinances or sales, because existing claims may need to be paid off, subordinated, or otherwise resolved before a new loan or transfer can proceed.
A title search reveals a recorded claim that must be cleared before the buyer can receive clean ownership and the lender can safely fund the loan. That recorded claim may be a lien.
A lien differs from an Encumbrance because lien is a more specific concept. Many liens are encumbrances, but not every encumbrance is necessarily a lien.
It also differs from Title Insurance. A lien is the underlying claim problem or right. Title insurance is a policy that may help protect against certain covered title issues.