Expert Advice When You Need It Most

What is a lien?

Written by: Alan James Brinkmeier

Reputation Level 20

Posted over 2 years ago. Applies to Illinois, 0 helpful votes, 0 comments

Save

Share with:

Real Property Lien

A lien is a form of security interest granted over an item of property to secure the payment of a debt. Any real property that carries a lien can be forced into sale by the lender, in order to collect what is owed, if the property loan is in default. Notices are usually required and formalities of due process must be followed, pursuant to the lending documents. If the borrower decides to sell, the lien holder on the property must be paid before the title will be cleared for transfer to the buyer.

Construction Lien

If you have built a house, you know that as the contractor completes phases of construction, payments are made on the amounts of work done at the completion of each stage. This is a good example of a construction (or mechanics) lien. This type of lien is put into place when the property owner owes money for materials or labor which improved the property in some way. This can include new construction, as well as things like landscaping, maintenance, repairs and renovations. Mechanics liens are put in place on commercial construction, too. Each subcontractor will have lien on the amount of work done until completion. Plumbers will lien the project for their plumbing work. Electricians will have a lien on the project for their work. These are other examples of construction liens.

Personal Property Car Lien

Your car lender will have a lien on the personal property you own such as the car you drive. If you go into default on the car payments, the lender can execute on the lien interest in the car to get their money. The car itself is used as the collateral for the loan, and the sales agreement imposes a lien in favor of the lender to secure the debt.