Here in this article, we will examine everything about home liens, the types of home liens, and how they work.

What are Home liens?

A home lien is a lien that the owner of a house has on the house. A home lien is created when you take out a mortgage or other loan to purchase your home.

The lender will record this lien in the county real estate records, which means that if you ever want to sell your property, the lien must first be paid off at or before the sales transaction.

Home liens differ from other types of liens because they don't give the creditor any right to sell off your property or pay off the debt if you fail to pay. However, the creditor can foreclose on the property if he wants, but only after he has obtained a judgment against you and gotten permission from the court.

Types of Home Lien

Liens can be filed against a home in a variety of ways. Some are advantageous to debtors because they are utilized to secure loans for major purchases, such as a mortgage lien.

Others, such as a tax lien, are recorded against your property due to unpaid bills. Here we are going to discuss a few of them:

1. Mortgage Lien

A mortgage lien is a legal right that gives a lien holder, such as a mortgage company or other type of entity or individual, a claim to the property until the outstanding debt is paid off. If the debt on the property goes unpaid, the holder of the lien maintains the right to take the property back from the borrower in full or until the borrow pays back the loan with possible extra fees within a certain timeframe.

2. Mechanics Lien

When you, the owner, are not paying the construction money to the builders, the contractor can file a court case and put a lien on your home. At the court, they will look at the home lien documents, and the legal process will start.

Construction liens present a challenge because if the general contractor doesn't pay them, the subcontractors of your construction company may file a lien on your property. So make sure you have paid all of them to avoid the hassle.

3. Tax Lien

This type of lien is started by the government when the person has not paid the taxes imposed by the government. The lien can get released once all the dues are cleared.

How Does Home Lien Work?

A home lien's main purpose is to carry out the obligation you are assigned. In case of any disruption in the contract, the other party can use the claim and take the case to court. There are certain financial obligations the homeowners have to meet so that the lien can be lifted.

For example, if you are going to buy a new home and you need a loan from the bank. To receive the loan, one can pledge their home as collateral.

Now the bank has the legal right to the home. If you are paying the debt that was decided, then you are on the safe side. Remember that you cannot sell the property without consulting the bank first.

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