Lien

Understanding Lien

A lien is an encumbrance that uses property as collateral for a debt. If the debt isn't paid, the lienholder can force sale of the property to recover their money. Liens provide security to creditors and are fundamental to real estate finance.

Liens can be consensual (agreed to by the owner, like a mortgage) or non-consensual (imposed by law, like tax liens or judgment liens). They can be specific (attached to particular property, like a mortgage on one house) or general (attached to all property, like a judgment lien).

Lien priority determines who gets paid first when property is sold. Generally, liens are prioritized by recording date—first in time, first in right. Major exceptions include property tax liens, which typically have super-priority regardless of recording date.

For curative title investors, understanding liens is essential. Tax sales may eliminate some liens but not others. Purchasing property 'subject to' existing liens means assuming responsibility for them. Title searches must identify all liens to understand the true cost of acquisition.

Real-World Example

Texas-Specific Information