No buyer will want to purchase your home, nor will any lender refinance your mortgage, with the lien still attached. For example, property tax liens may sometimes be foreclosed outside of court, while the holder of a mechanics’ liens must typically sue the homeowner in court in order to foreclose.

What does it mean to foreclose on a lien?

When a lien is foreclosed upon, the lienholder forces the sale of the property so he or she is paid the portion of the proceeds from the sale that he or she is owed. Valid property liens must be paid off before the property can be sold.

Can a house be foreclosed on with a lien?

Some liens are simply attached to the property and the lien holder is paid from the proceeds of a sale or refinance. Others allow the lien holder to take possession of the property (a first mortgage). Some liens cannot be foreclosed on because of their position. It is, therefore, vital to determine where you stand in line to get paid.

What happens when a senior lienholder forecloses a property?

This first article explores the process when a senior lienholder forecloses a property that includes junior liens. In this scenario, the junior lienholder can’t prevent foreclosure of its lien.

What should I do if I have a lien on my house?

If your lien is in first position, you are ideally poised to take possession of the property if your borrower is in default. If you are not, you must either buy out the liens ahead of yours and foreclose as the owner of the first mortgage. Or, you may negotiate to have other lien holders buy your lien, which will pay you off.

How are liens enforced by creditors in real estate?

A lien is a creditor’s legal claim against property, like a home, that a debtor owns. The home serves as security for a debt. There are two types of liens: voluntary and involuntary. The first type—called voluntary liens—are liens the homeowner agrees to, such as mortgages and home equity loans.