What is a Lien?
A lien is a legal right that allows a creditor to take possession of a debtor’s property if the debtor fails to fulfill their obligation. This can be in the form of unpaid debts, services, or loans.
Types of Liens
- Mortgage Lien
- Mechanic’s Lien
- Tax Lien
Example of a Lien
For instance, if you fail to pay your mortgage, the lender has the legal right to foreclose on your property and sell it to recover the owed amount.
Case Study: John’s Construction Company
John’s Construction Company placed a mechanic’s lien on a property after the owner failed to pay for the renovation work. The lien allowed the company to claim the property to cover the outstanding payment.
Statistics on Liens
According to a recent study, there has been a 10% increase in tax liens filed in the past year, indicating a rise in financial distress among individuals.
