Lenders and other creditors use real estate liens to secure debts. A real estate lien, once placed, remains in effect until the lien holder decides to release the lien. Generally, a lien holder only releases a lien when the debt that caused the placement of the lien has been settled. Aside from your creditors, the government can also place a lien to force the payment of back taxes.
When you borrow money against your home, you sign a security agreement that allows your lender to place a real estate lien on your home. Your lender has to file the security agreement at the local county courthouse during a process known as "recording the lien." When you eventually settle the debt, your lender files second notice with the county courthouse, called a "satisfaction of lien." After filing satisfaction of lien, the lender no longer has a claim on your home.
Typically, real estate liens take the form of mortgages and most mortgages have term times that last for between 15 and 30 years. Assuming you make your monthly payments as agreed under the terms of your mortgage agreement, the lien on your home remains in place for the duration of the loan term. If you make additional principal payments, you may end up paying off your loan before the end of the mortgage term, in which case your lender must release the lien early. Conversely, if you miss loan payments or incur penalty fees for making your payments late, your lender can extend the lien past the original mortgage end date and keep the lien in place until you have paid off the debt.
You cannot sell your home or transfer ownership of your home until you have satisfied any liens that exist on the property. If you take out a home loan and fail to make your regularly scheduled payments on the debt, your lender, having placed the lien, can foreclose on your home and sell your property to recoup the debt.
If multiple liens exist on your property, the liens are arranged in order of seniority, which means that the first lien holder to place a lien has the first claim on proceeds from the sale of your home. During a foreclosure sale, junior lien holders often end up with nothing if the home sale fails to raise enough money to cover all of the debts.
Lien holders must release satisfied liens but errors can occur and in some cases a lender may file a satisfaction of lien with the wrong county or forget to file it at all. Even though you no longer owe money on the debt, an unsatisfied lien prevents you from refinancing or selling your home.
Many people assume that when they pay down home equity lines of credit, the lender will close the line and file a satisfaction of lien. In fact, a HELOC can remain open with a zero balance for many years so you must instruct your lender to close the line when you pay down if you have no plans to use the HELOC in the future.
How Long Does a Lien Stay on Your Bank Account?
A lien or frozen bank account has a great impact on your money situation. You can't write checks on the account or...
How Long Can the IRS Collect on a Tax Lien?
How Long Does a Texas State Tax Lien Stay on Your Credit? A Texas state tax lien can have a severely negative...
Federal Tax Liens on Real Property: How Long Do They Last?
The Internal Revenue Service can file liens against delinquent taxpayers' real and personal property by filing a Notice of Federal Tax Lien....
How Long Do Tax Liens Stay on Credit Reports?
An IRS tax lien can prevent a consumer from getting the financing and credit they need, and it can also mean that...
How to File Mechanic Liens in New York
How to File Mechanic Liens in New York. ... Filing a property lien against someone who owes you money should be your...
How Long Is a Judgment Lien Good for in Florida?
How Long is a Lien Good on an Auto Title in Michigan? When you purchase an automobile with cash, ... How Long...
How Long is a Lien Good on an Auto Title in Michigan?
How Long Does a Home Lien Last? ... Purchasing a car that has liens on the title can be quite difficult to...
How Long by Law Does a Bank Have to Release a Lien?
When you take out a secured loan such as a mortgage or car loan, your lender places a lien on the collateral....
When Do IRS Tax Liens Expire?
Liens don't last forever -- depending on when they were filed, they expire after six or 10 years ... Federal Tax Liens...
How Long Do You Have to File a Lien on a Property in Ohio?
How Long Do You Have to File a Lien on a Property in Ohio?. ... Make It Last; Investing. Building Wealth; Balancing...
Does a Property Lien Get Removed When the Lien Holder Dies?
It is rare that a lien will move into a death estate and be ... their accounts receivable tend to remain in...
How to Find out If a Mobile Home Has a Lien on It
Before you buy a mobile home from a private party, you need to find out if the title has any liens on...