What is a lien?
A lien is a charge or claim that one person (lienor) has on the property of another (lienee) as security for an obligation or debt.
How do they come to be?
Agreement between two parties or operation of law creates them. They always arise from a debt.
What is the difference between the terms general and specific?
If a lien is general, then it applies to all personal and real property. If it is specific to one property, such as a house upon which a mortgage is applied, then it is specific.
Are there any other terms that are related that I should know for my exam?
Yes, they can be voluntary and involuntary. You mean you could voluntarily create one against yourself? Yup. When you take out a mortgage, you are creating one that is voluntary. If it is involuntary, it is one created without your permission, usually by law, such as a mechanic’s lien. If created by a judgment it is statutory.
For example, a mechanic’s or materialsman’s lien is placed on a property by a party who performed labor or furnished material to improve a property. It is a statutory involuntary specific lien. A court issues it (statutory) without the action of the owner (involuntary) and relates to one property (specific).
Who gets their money first?
As you can see, there could be many in place on a person’s property. Say, for example, someone has an outstanding IRS property tax lien, a mortgage and a mechanic’s lien. Who gets their money first? The priority of who receives money when is usually the following:
- Real estate taxes and special assessments get paid first.
- The debtor in the first, or senior, lien position is paid next.
- The debtors in junior positions (second, third, and so on) are paid in the order of recording.
What else can help me prepare to pass my real estate licensing exam on my first attempt?
Other tips to help you pass your real estate licensing exam on your first attempt:
Also, check out our question of the day videos on our YouTube channel:
Check out the related definition in our real estate dictionary: