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What is a lien and how does it affect you?

You’re in good company if you’re not exactly sure how liens work. It’s not one of those topics that makes it into most people’s water-cooler conversations.

But knowing what a lien is and how it works could give you a lot of power to understand your options if it comes up in your financial life. That could help you make the best decisions for your family—and feel confident about your choice.

explains how liens work.

Key takeaways:

• Liens give someone else a right to things you own if you owe them money.
• Liens can be voluntary, like for a mortgage, or involuntary, like for unpaid child support.
• You could get rid of liens by paying back what you owe or negotiating the debt.

Liens explained

A is a legal right that someone (usually a lender) has to claim property that you own. A lien could be for a specific property—like your home, car, or savings account (a property lien)—or it could be more general and apply to everything you own (a blanket lien).

If you miss certain obligations, such as keeping up with loan payments, the lender holding that lien could take your property. Once you repay a debt in full, the lender will remove the lien.

Liens generally have to be filed with your local county clerk’s recording office to be valid.

You might not even know you have a lien unless you’re paying close attention. Liens operate silently in the background as long as you keep making your payments.

Lien example: Home mortgages

Liens aren’t always as scary as they first sound. In fact, they can mean something really positive. Take the case of a mortgage or home equity loan. When a lender gives you the money, they’ll file a lien against your home. It doesn’t mean you’ve done anything wrong at all. On the contrary, it’s just a standard way of doing business. You still own the title to your home.

In this case, a lien allows the lender to foreclose on your home only if you don’t repay the debt as agreed. Foreclosing isn’t something lenders are usually keen to do, since the process costs them money, too. That’s why lenders will try to work with you on a solution, and they’ll typically only foreclose on your home as a last resort.

If you still have a when you go to sell your home, your lender will be paid first out of the money you get from the home sale. This removes the mortgage lien.

There are other types of liens, too, and they can work a bit differently.

Types of liens and how they work

Liens generally fall into two classes. They work slightly differently.

Voluntary liens

Lenders usually file voluntary liens when you borrow money for a big-ticket item like a home, an RV, or a car. Those items serve as . The lien gives the lender the right to sell your collateral and use the money to repay your debt if you don’t pay it back according to your loan agreement.

Involuntary liens

Involuntary liens can happen if you owe money for other things, like unpaid taxes or bills. If someone and wins, or if you fail to pay things like child support or alimony, you could end up with an involuntary lien against your home or other property. Your creditor could also your wages or other government benefits to repay the debt. A garnishment means your employer or bank would be ordered to send part of your pay to a court, which would then send the money to your creditor.

Is it possible to have multiple liens?

It’s very common for people to have multiple liens at once. You might have a lien tied to your home for your mortgage, for example, along with a second lien if you took out a home equity loan or line of credit.

In that case, if your home is sold, your mortgage lender is first in line to be repaid, followed by your home equity loan lender, and then you.

How liens affect your credit and financial options

Credit standing

Liens aren’t listed on your , so they don’t have any impact on your credit—at least, not directly.

If your lien is tied to a debt you owe, and that lender decides to report the debt to the , the debt may appear on your credit report.

This commonly happens with mortgages, home equity loans, and auto loans. The lien isn’t listed on your credit report, but the loan is, and that’s what could impact your credit score.

Sale of asset

When you have a lien in place, your options may be limited. If a lien is tied to your home, for example, you might not be able to borrow as much against your , or at all. A lien stays with your home even if you sell it. If the sale isn’t large enough to pay off the debt, it could be hard to convince buyers to purchase your home since it’ll come with the added debt.

Legal leverage

In some cases, the person holding the lien could draw resources from you in other ways. If someone wins a lawsuit against you in court, for example, the lien could give them the right to garnish your wages. Lien laws vary a lot depending on where you live, and the legal issues could get complex fast. It’s a good idea to if someone has a judgment lien against you.

Steps to remove a lien and protect your finances

Liens aren’t meant to be permanent, and it’s possible to get rid of them. You generally don’t need to follow up with liens for debts that you know you owe and repay on schedule, or sooner, like your mortgage. Those liens are put in place and removed as a regular course of business.

But in some cases—especially for liens you weren’t expecting, or if you want to use your property for other things—it can be good to know how to remove them.

1. Check for liens. You can check with your county recording office on your own, use online services, or hire a title company (the same kind you use when you buy a house). There’s usually a small fee if you do it yourself. Hiring a title company is the best way to be sure, but it costs more.
2. Pay off or negotiate the debt. The only way to remove the lien is to take care of the reason it was filed in the first place—usually by paying off a debt that you owe or . Most people do this automatically if they keep making their regular payments.
3. Verify the lien has been removed. Lenders will remove the lien once the debt has been paid off. You don’t necessarily need to check, but if you want to be sure, you can do another lien search like you did in Step 1 to ensure it’s gone.

Living with liens isn’t a big deal for many people. It’s possible that you won’t even notice, such as if you pay your debts on time. But occasionally, liens can cause issues—and when they do, it’s important to know that you’re not alone and there are financial professionals who can help, no matter your financial situation.

Frequently asked questions

Can a lien be removed without payment?

You’ll generally need to pay back a debt in order to get it removed, but there are some exceptions. If someone filed a lien against you for debts you don’t owe, you may be able to ask them to remove it or take them to court if necessary. You could also try negotiating with the lender to accept a smaller payment in order to get the lien removed.

Is a lien the same as a mortgage?

No. A mortgage is a loan that a lender gives you to buy a house. A lien is a legal right that your lender has to claim your home if you don’t repay that loan.

How long does it take to remove a lien once paid?

In general, it takes up to four weeks for some liens to be removed, such as . It may vary, depending on how quickly your lender submits the correct form and how your county recording office processes it.

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