Written by:
Image
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades.

Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers. While there, Paul authored and edited thousands of financial research briefs, was published on Nasdaq. com, Yahoo Finance, and dozens of other prominent media outlets, and appeared as a guest expert at prominent radio shows and i...

View all posts
Updated September 30, 2020

What is Property Lien?

A property lien is a lender's claim against a piece of real estate that may be legally sold should the borrower fail to repay a loan.

How Does Property Lien Work?

When someone takes out a sizeable loan, such as a home mortgage, the lender often requires an asset that can be held as collateral against the loan. Thus, the collateral has a property lien placed upon it. In the event of non-payment on the part of the borrower, the lending institution can exercise the property lien and sell the collateral asset to offset the unpaid loan. Once the loan is repaid in full, the collateral asset is returned to the borrower and the property lien dissolved.

To illustrate, suppose someone takes out a $500,000 loan for a new house. As part of the loan's terms, the bank gets to hold the title to the house as a property lien against the house until the loan is fully repaid. Should the borrower default, the bank can use the title to the house to sell it in order to recover the money that was lent.

Why Does Property Lien Matter?

A property lien protects lenders in the event of non-payment. Since loans with collateral are less risky for the lender, they can lead to lower interest rates for the borrower.

When purchasing a used car, for example, it's important to check for liens against the vehicle. If there is an outstanding debt on the car, the buyer runs the risk of having it repossessed by the lender.

Ask an Expert about Property Lien
At InvestingAnswers, all of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Property Lien.
Be the first to ask a question

If you have a question about Property Lien, then please ask Paul.

Ask a question

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers.

If you have a question about Property Lien, then please ask Paul.

Ask a question Read more from Paul

Read this next

Paul Tracy - profile
Ask an Expert about Property Lien

By submitting this form you agree with our Privacy Policy

Share
close
Don't Know a Financial Term?
Search our library of 4,000+ terms