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What is a Lien Notice?

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  • Written By: Licia Morrow
  • Edited By: C. Wilborn
  • Last Modified Date: 14 November 2016
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A lien notice is a document stating that one party, who owns some sort of asset, promises to pay off a debt to another party by allowing the second party to have legal interest in the asset. For example, if a homeowner owes a debt to another party, the second party can issue a lien notice on the home property stating that until the debt is paid, the homeowner may not sell or otherwise dispose of the property. A common form of lien is a home mortgage between a homeowner and a bank. There are several types of lien notice used for different purposes.

One type of lien notice is carried out by law. This type of notice forces the asset holder, or lienor, to enter into the contract with the person to whom he owes the debt, called the lienee. Other types of lien notices are consensual, meaning that the debtor volunteers to place his property or security into the temporary possession of the lienee until the debt is paid.

In some lien cases, the creditor takes actual possession of the property. In other cases, the property is retained by the debtor until it is sold or the debt is paid. Particular liens apply to only the property in question, while general liens force the debtor to make all owed payments to the creditor.

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There are several specific types of lien notices, including those used in law and business. A tax lien notice states that the debtor will pay some sort of tax, while weed liens are enforced by the government to avoid a debtor's untended property from becoming a public endangerment. A mechanics lien protects those who do work on an asset and ensures payment for this work. A judgment lien notice is used against an individual who has lost a court case and has a financial responsibility for the judgment. Admiralty law even has a maritime lien that applies to seagoing vessels.

A perfected lien gives one creditor preference over others that may attempt to make claims against the debtor. In order to obtain a perfected lien notice, a creditor usually must follow the law and notify the other creditors of his intent. If an asset is possessed by the creditor, such as in the case of a home mortgage, the lien is assumed to be perfected. If the debtor is still in possession of the property or security, it may be necessary for a creditor to file a security interest document.

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