What is a Lien on a House?

Edited by Hannah Locklear

Mortgages are the most common liens on homes. The property title is in your name when you take out a mortgage. However, the lender has some legal claim to the house until you fully repay the loan. That legal claim is called a lien—an attachment to the home that gives the holder some property rights.

Creditors use liens to ensure borrowers pay their debts. It's like using the house as collateral for a loan. And the lender can foreclose the mortgage to recover their money if you fail to repay as agreed.

But mortgages are just one type of lien. Some liens are less voluntary and may come as a surprise to consumers. This article explores lien types, how they affect the title to a property, and how to prevent a judgment lien on your house.

What types of liens can be placed on a house?

Liens generally fall into two groups—voluntary and involuntary. As the names suggest, the former is placed on the house with the owner's permission, while the latter applies against the owner's wishes.

Voluntary liens on a house include the following:

• Mortgages
• Second mortgage/ junior-lien

Voluntary liens are “good” because they allow the borrower to use the home while repaying the loan. These liens are removed from the house once the lender gets their money in full and are typically no cause for worry if you keep up with your repayments.

What are the different types of involuntary liens on a house?

Financial troubles, disagreements between homeowners and contractors, and missed tax payments can all result in you “co-owning” your house with someone else.

The following are examples of involuntary liens you can have on your house.

• Mechanic's lien: You should pay for services if you hire someone to do major renovations or improvements on your house. Failure to pay them can result in the contractor placing a lien on your home. If the county approves the lien, you must either pay them or negotiate a settlement; otherwise, you cannot transfer ownership with a clean title. Without a clean title, you will be unable to sell your house.


• Property tax lien: If you owe the government property taxes, they can place a lien on your house until you catch up on your responsibilities. Local, county, state, or federal government can claim part of your property for the amount you owe.


• Homeowners Association (HOA) liens: You must pay your HOA dues and avoid breaking any housing codes; otherwise, the association can get a lien on your house.


• Judgment lien: Judgment liens come into effect because of court orders. For example, suppose you fail to pay your unsecured loan, and the creditor or a debt collector takes you to court. The judge can issue a default judgment if you don't Answer the Summons. Or the litigation process can prove that you are indeed guilty. If that happens, the creditor has several options for recovering their money. They may obtain permission to garnish your wages, freeze your bank accounts, or place a lien on your property.

So, is it bad to have a lien on your house? Let's explore some of the consequences of having liens on your home below.

How does a lien on my house affect it?

Liens are legal, so you cannot just wish them away. Having a lien on your house has several disadvantages, including the following:

• Many buyers want to avoid a home with liens, as it is difficult, if not impossible, to secure a mortgage on a house with a lien against it. As a result, your listing may stay on the market too long.
• Liens reduce your house's market value.
• Even if you sell, you must pay part of the amount to the lien holder.
• Your credit score will drop if liens against your property reach the credit monitoring bureaus.
• It becomes harder to refinance your mortgage if need be.

For most consumers struggling with debt, judgment liens are a possible reality.

How to prevent the court from issuing a judgment lien

Many debt settlement companies wrongly advise consumers to refrain from paying their unsecured debts. Some even say to ignore debt collectors' lawsuits. However, ignoring a court Summons is the quickest way to get a judgment lien on your house.

Instead, if a creditor sues you, file your Answer within the deadline at the court. Be sure to send the plaintiff a copy of the document.

Use SoloSuit to generate your Answer in minutes.

After filing your response, you can offer to settle the debt out of court. Or you can invoke the arbitration clause in your contract to force the lawsuit out of court. SoloSuit provides these products cheaply for consumers who cannot afford to hire an attorney.

Remember that involuntary liens taint your property and may put off potential buyers. It's in your best interest to do your all to prevent or remove them when possible.

Related: How to Get Rid of a Judgment Lien on a Property.

To learn more about how to respond to a lawsuit and avoid a judgment lien, check out this video:

What is SoloSuit?

SoloSuit makes it easy to fight debt collectors.

You can use SoloSuit to respond to a debt lawsuit, to send letters to collectors, and even to settle a debt.

SoloSuit's Answer service is a step-by-step web-app that asks you all the necessary questions to complete your Answer. Upon completion, we'll have an attorney review your document and we'll file it for you.

>>Read the FastCompany article: Debt Lawsuits Are Complicated: This Website Makes Them Simpler To Navigate

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