What is a Lien Holder?

A lienholder is a party or individual that has a lien or claim on land. The claim is created by an arrangement, like a mortgage, that created a debt secured by the property. The lien amount will exceed or equal the market value of the property; the excess portion of the lien worth is known as a unsecured debt.

Mortgage Lien

In case the borrower defaults on the mortgage , the lienholder has the right to foreclose and sell the property that secures the loan. Before buying any house, a buyer must verify that all outstanding liens on this property have been secured, a job that is accomplished by adhering to a title search. Title insurance protects the buyer against any unforeseen liens that were not satisfied at the time of the buy.

Tax Liens

The federal government, as well as local and state governments, may become lienholders in the event the property owner has failed to stay current with property taxes, or has failed to pay assessments set on the property and on neighboring properties such as developments, like the installation of street light or even a new sewer line. A lien limits the proprietor’s ability to refinance the mortgage to the house or freely transfer title to another party.

Structure and Mechanic’s Liens

Mechanics, contractors, and laborers can become lienholders when repairs or improvements to the house go unpaid. These” mechanic’s liens” are subject to restrictions and deadlines imposed by each state. They must, generally speaking, be registered pursuant to a written arrangement between the lienholder and the house owner. Third parties are prohibited from placing liens on the house for the benefit of somebody else. The owner may demand a waiver of lien by a contractor before work begins; additionally, mechanic’s liens can’t be claimed in the proprietor at a bankruptcy.

Lien Judgments

A lienholder can seek enforcement of the lien in civil court. A last judgment in the matter places a lien on your house that must be satisfied before title can be transferred to another party. The judgment, in certain states, may be enforced on the borrower’s house in another place. A lien decision expires after a period of time determined by state statute, and may be imposed by order of the court through wage garnishment, seizure of land, or forced sale of the home property.


Lienholders issue releases if their liens are happy. The borrower or property owner must have the discharge recorded from the clerk of court, so that the lien is lawfully sanctioned. LIens look in public documents as well as credit reports for as long as they stay valid. Liens might also be sold, auctioned, or transferred by a lienholder to another party.

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