Liens

Liens are legal claims or encumbrances placed on an asset to guarantee repayment of a debt or performance of an obligation. If outstanding sums remain unpaid, the lienholder can pursue further measures—like forced sale—to recover costs. Common liens arise from unpaid taxes, contractor bills, or lender-backed mortgages, each restricting the asset’s free transfer until obligations clear.

Key Points:

• Security Interest: Protects creditors’ stake in case of borrower default.
• Release Upon Payment: Typically lifted once the debt is settled fully.
• Public Record: Recorded to notify potential buyers of existing liabilities.
• Priority Hierarchy: Some liens outrank others, impacting how proceeds distribute if liquidation occurs.

By imposing a lien, parties ensure compliance with obligations, safeguarding creditors from losses while reminding owners to resolve debts prior to disposing of the underlying asset.