What is a Lien

A Lien on Property is a notice attached to the Property stating that a creditor claims that it is owed money by anyone who owns the Property.  A Property Lien is typically a public record. A Property Lien gives a creditor the right to seize or take Property if the Property owner is unable to keep up with payments or pay off debts.   Liens on Property are a common way for creditors to collect what they are owed.

The terms Lien and Encumbrance are often used interchangeably but there are differences. All Liens are Encumbrances but not all Encumbrances are Liens.

A Lien on Property uses the Property to secure a loan from a lender to a borrower. A Perfected Lien is a lien that has been recorded with a legal authority. For Property Liens, the lender usually files a Deed of Trust with whichever agency is responsible for recording Property Deeds. By filing and recording Liens a lender gains protection from other parties making claims against a Property. A Perfected Lien gives a lender priority in the event that the borrower fails to make payments on the Property.

An Unperfected Lien is a Lien that a lender has not filed with the correct legal authority. As a result other creditors can make claims on the property.

A creditor with a Perfected Lien takes priority as far as being paid for the secured debt over creditors with Unperfected Liens.