• A lien is a legal claim or a "hold" on some type of property, whether personal or real property, making it collateral against monies or services owed to another person or entity. A lien usually exists in situations like second mortgages, loans against a vehicle title, or money loaned against any other substantial item owned by a borrower. It may keep the borrower from selling the property, or at least keep him or her from transferring title to the property. Any property that carries a lien can be forced into sale by the lender, in order to collect what is owed, if the loan is in default. If the borrower decides to sell the property, the lien holder must be paid before the title will be cleared for transfer to the buyer. There are different kinds of liens, and one of the most common is a mechanic's lien, also known as a construction lien. This type of lien is put into place when the property owner owes money for materials or labor which improved the property in some way. This can include repairs, maintenance, and new construction, as well as things like landscaping and renovation. When purchasing real estate, it is important to make sure there is no lien on the property that will keep you from securing a clear title. This is accomplished by conducting, or hiring an abstract company to conduct, a title search or "abstract of title." This simply means developing and examining a collection of publicly recorded documents regarding the history of the property. A title search will usually indicate whether or not a lien exists and whether the seller is the legally recognized property owner. It should also indicate the exact legal description of the property, as well as providing details regarding a lien or other encumbrances against the title. This is especially important if you are using creative financing techniques to purchase the property, such as owner financing or a land contract. Otherwise, once you have paid the agreed upon price, you may discover that you still do not own the property free and clear.

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