Definition of Specific Lien
A specific lien is a legal claim against a particular piece of property that is used as collateral to secure a loan. If a borrower defaults on the loan, the lender has the right to enforce the lien, typically through foreclosure and sale of the property to recover the debt. This contrasts with a general lien, which is a claim against all the assets owned by a debtor.
Examples of Specific Liens
- Mortgages: A mortgage on a house is a specific lien. If the homeowner defaults on the mortgage, the lender can foreclose on the house to recover the owed amount.
- Mechanic’s Lien: A contractor who does not receive payment for work done on a property can place a mechanic’s lien on that specific property.
- Property Tax Lien: If property taxes are unpaid, the government can place a lien on the specific property for the amount of unpaid taxes.
Frequently Asked Questions (FAQs)
What is the difference between a specific lien and a general lien?
A specific lien is tied to a specific piece of property, whereas a general lien applies to all the assets of a borrower. For example, a mortgage is a specific lien while a judgment lien for an unpaid debt can be a general lien.
How does a specific lien work?
When a borrower defaults on a loan secured by a specific lien, the lender can take legal action to foreclose on the property and sell it to recoup the borrowed amount. The lien establishes the lender’s priority over other creditors regarding that particular property.
Can a specific lien exist without a written agreement?
Typically, specific liens arise due to a written agreement, like a mortgage contract. However, statutory liens, such as property tax liens, might be imposed without direct borrower agreement based on law.
How can a specific lien be removed?
A specific lien can be removed by paying off the debt secured by the lien. For example, paying off the mortgage removes the mortgage lien. Alternatively, legal proceedings can sometimes lead to the removal of a lien.
Are specific liens always monetary?
Most specific liens involve monetary claims, but they can also arise from unpaid services (e.g., mechanic’s lien). The core aspect is that they provide a creditor the right to the specific property in case of default.
Related Terms
- General Lien: A claim against all assets of a debtor.
- Foreclosure: The legal process through which a lender seeks to recover the balance of a loan from a borrower who has stopped making payments, by forcing the sale of the property used as the collateral.
- Collateral: Property that a borrower offers as a way for a lender to secure the loan.
- Mechanic’s Lien: A specific lien secured by real property on which a contractor, laborer, or supplier has furnished labor or materials.
Online Resources
- Investopedia - What is a Lien?
- Nolo - Specific vs. General Liens
- IRS - Understanding Different Types of Liens
- Mnuchin Department - Property Lien Resources
References
- Glink, Ilyce. 100 Questions Every First-Time Home Buyer Should Ask. Three Rivers Press, 2005.
- Schlesiger, Todd. Real Estate Terms Pocket Dictionary. Scottswall, 2004.
- Martin, Weston J. Real Estate Law and Business Essentials. Expert Publishing, 2020.
Suggested Books for Further Study
- Mortgage Finance Regulation by Susan M. Wachter
- Contemporary Real Estate Law by C. Kerry Fields and Kevin C. Fields
- The Law of Liens: A Commentary on the Law of Liens by George Hugh Smith
- Real Estate Finance Law by Grant S. Nelson and Dale A. Whitman
