Liens

Question 1

a claim made by a creditor against real or personal property pledged by a debtor as collateral. Because liens are creditors’ claims that impact title, they are considered encumbrances.

Answer 1

Lien

Question 2

a lien that is created on purpose and with the agreement of the owner of the property in question. That means the property owner chose to initiate a lien that would not otherwise exist.

Answer 2

Voluntary Liens

Question 3

which is obtained through an action of law without the owner’s consent. The property owner does not take any action to initiate the lien.

Answer 3

Involuntary Liens

Question 4

is a lien for which the real estate AND personal property may be sold to satisfy the debt.

Answer 4

General Lien

Question 5

is a lien that applies to a certain property only. Personal property is not affected.

Answer 5

Specific Lien

Question 6

is a documented recording at the courthouse giving notice that a lawsuit is pending on a particular piece of property. This informs the public, including any interested parties, of the potential claim on the property.

Answer 6

Lis Pendens Notice

Question 7

Here are the key terms you learned in this chapter:

general lien
a lien for which the real estate AND personal property may be sold to satisfy the debt

junior lien
a lien that has another (senior) lien superseding it in priority; a.k.a. inferior lien

lien priority
the order in which liens against a property will be settled

lis pendens
a document recording at the courthouse giving notice that a lawsuit is pending on a particular piece of property

mechanic’s lien
a type of involuntary, specific lien that a mechanic or materialman can impose upon a property if the property owner fails to pay for materials or work done on the property

senior lien
a lien that comes first on the priority of liens, often a tax lien; a.k.a. superior lien

special assessment lien
a lien placed against property to collect taxes for a specific improvement benefiting the property

specific lien
a lien that applies to a certain property only

subordination agreement
a contract that gives a mortgage recorded at a later date priority over a previously recorded mortgage

Key Concepts & Principles
Here are the concepts and principles you’ll want to master from this chapter.

Voluntary, Involuntary, General, and Specific
A voluntary lien is a lien that is created on purpose and with the agreement of the owner of the property in question.

An involuntary lien is obtained through an action of law without the owner’s consent.

A general lien is a lien for which the real estate AND personal property may be sold to satisfy the debt.

A specific lien is a lien that applies to a certain property only. Personal property is not affected.

Comparing Liens
We learned about a lot of different kinds of liens in this level! Here’s a snapshot:

A chart listing all of the lien types and whether they are general or specific and voluntary or involuntary.

Image description
Lien Priority
Liens are commonly prioritized in the same order in which they were recorded. Remember it this way: first in time is first in line.

However, there is one major exception to the “first in time is first in line” rule. Some taxing entities take priority over any other kinds of liens in the public records. Ad valorem taxes and special assessments will always be paid first. That’s known as being in “first position.”

Junior and Senior Liens
A senior lien, or superior lien, is a lien that comes first in the priority of liens. If there’s an ad valorem or special assessment tax lien involved, it will be the senior lien.

A junior lien, or inferior lien, is a lien that has another (senior) lien superseding it in priority.

Answer 7

Review Questions