Liens at a Glance

In common law, a lien is a form of security interest which is granted to cover a particular item of real property. A lien is used to secure the loan requirements outlined in a debt contract; the lien acts as a source of collateral to secure the payment of debt or performance of some obligation.

Liens are legal claims that effectively place a "hold" on some form of property. When a lien is placed on real or personal property it creates collateral against any services or financial requirements owed through a debt obligation to another entity or person. Liens are usually present in the following situations: second mortgages and money loaned against a substantial item such as a vehicle.

The presence of a lien will impede the borrower from selling or transferring the property which carries the lien. Any form of property that carries a lien can be forced into sale by the lender, for the sake of fulfillment of the underlying loan obligation. If the borrower chooses to sell the property, the holder of the lien must be paid before the title is transferred to the buyer.