A lien is a type of legal claim that can be made again a person or asset by an entity or someone who, according to contract, is owed a payment. The entity that holds the lien or creates it through a legal process is known as the lien holder. This lien holder must pursue repayment for the lien to work. When the court collects payment, often through garnishing wages or a forced sale of an asset, it is this lien holder the court pays. It is not common for a lien holder to die and leave a lien active, but when it does happen, the lien tends to remain.
Property liens typically are connected to either a mortgage or a property tax that has remained unpaid. In some cases, they can also refer to an equity-based line or loan or another type of loan using the property as collateral. In this type of lien, the debt that must be repaid is connected with the property itself. The bond of a secured loan is not easily broken, not by the death of either party, so, as a general rule, a property lien will follow the property no matter who holds the lien or owns the property.
Death of a Lien Holder
Sometimes homeowners obtain mortgages or secondary home loans through a private lender who charges higher interest rates but makes a loan when other lenders will not consider the homeowner's loan request. In this case, the lender might file a lien to collect late debts, but then die. When this happens, all the lien holder's financial information passes into the estate of the individual. This estate can collect on the lien and usually will. In some cases, the lien may pass to heirs. It is rare that the lien will disappear altogether.
It is rare that a lien will move into a death estate and be collected by an executor. Most property loans are made by large institutions, banks and similar financial organizations. While these businesses can fail and be liquidated, their accounts receivable tend to remain in trust or are bought by other businesses so collection continues. In some cases, such as a property tax lien, the lien is held by the IRS, and there is no death or dissolution that will affect it.
Lien Time Frames
Although the death of a lien holder will not end a property lien, that does not mean the lien will never go away. If a lien remains dormant for a certain amount of time, it ends automatically. For instance, a property tax lien lasts only 10 years, after which it must be renewed or it will end. Mortgage lien lifetimes can vary, but they tend to last for a similar time or less before ending. This protects homebuyers who may have unwittingly inherited property liens from years earlier.
How to Get a Second Mortgage Lien to Release
When you take out a second mortgage, the lender records a lien on the house at the county court house. When you...
How Does a Home Equity Loan Effect PMI?
Private mortgage insurance (PMI) protects mortgage lenders in the event of borrower default. You typically have to pay for PMI if you...
How to Remove the Lien on a Property
Removing the lien on a property requires contacting the lien holder, coming to a settlement and paying off the inherent debt. Negotiate...