What are liens and foreclosures?

A bond is a notice attached to your property that constructively notifies everyone that the creditor has a claim. The bond is usually formalized and registered with the county government records (for real estate) or with the secretary of state (for personal property). Why does the collateral help the lender? Well … in order to sell or refinance a property, the borrower’s lender will require clear ownership of the property as a precondition for obtaining a loan. Thus, a lien on your home has the negative effect of obscuring ownership and thus preventing you from selling your property. To clear the ownership of the property, you must extinguish the lien and register the exemption with the county public records so that everyone is notified of the debt cleared. If the bond is not paid, some bondholders may choose to seize the property and collect what they owe.

7 most common types of liens

Property tax lien: When a homeowner does not pay taxes on his property, the city or county in which the property is located has the power to seize the property and force the sale if taxes are not paid.

IRS Lien: Federal government files liens right to IRS for tax evasion. If you own an interest in your property, tax withholding can be paid from the proceeds of the sale at the time of closing. If the home is being sold for less than the bond, the taxpayer may require the IRS to remove the bond to allow the sale to be completed. A taxpayer may also require federal tax liens to be secondary to a lending institution’s lien in order to permit refinancing or mortgage restructuring.

Lien mechanicsA Mechanic’s Bail is a statutory lien that secures payment for services, labor and materials related to improvements made to real estate. State laws establishing mechanics’ retention rights vary from state to state. These statutes provide the criteria and circumstances necessary for the creation, filing and improvement of the security law of mechanics. Mechanic’s lien right is generally classified as a back-up lien, which means it can override all existing liens previously registered in relation to real estate, including the mortgage lien, which must be the first priority lien.

HOA LIEN: Homeowners who live in a coveted community will often be required to pay HOAs a recurring fee to cover community upkeep. For example, the HOA will collect fees to pay for things like landscaping, security, or the maintenance of common areas such as swimming pools, tennis courts, workout rooms and clubs. To determine the amount each homeowner must pay, the HOA will usually budget and divide the total costs by the number of homes in the community. The homeowner must pay his share on a predetermined basis throughout the year. In addition, the HOA may charge special contributions for one-time expenses if the HOA’s reserve funds are insufficient. For example, an HOA may charge a special fee to pay for a new damaged road or to replace a guard gate. If the homeowner becomes overdue in paying their monthly premiums or special contributions, the HOA will issue a lien and will automatically be attached to the homeowner’s property. This is a right of pledge over property that can be seized to pay off debt.

Judicial security law: Litigation lien is a type of lien that is created at registration, when a lawsuit is won against you, and then attached to your property to receive payment when it is sold.

Utility deposit: A bond made by a city or utility on a property for non-payment of utility bills such as water or electricity.

Divorce link: Bond made on property as a result of a divorce decision.

Are all liens the same?

Not! Collaterals vary in nature and priority. Priority is critical to the lender, and the benefits of having a first mortgage, such as a first mortgage on a property, are very important. The lender with the preemptive right of lien in the form of a mortgage on the property is entitled to repay its debt from the proceeds from the sale of the mortgage prior to the repayment of any junior collateral holder. This is very important because the foreclosure extinguishes all interests in the mortgage (also called a home) that are minor compared to this mortgage.

What is the foreclosure process?

The foreclosure process differs from state to state. In Florida (foreclosure injunction state), the lender files a claim through a complaint with the clerk and serves the borrower with a subpoena. The lender will include in the complaint any other junior rights holders to take away their subordinate interests, such as co-borrowers or unknown tenants, who may be eligible to lease the home. After the borrower receives the complaint, they have 20 days to file a response. Otherwise, the creditor will file a default claim. However, if the borrower provides a response, the lender will either submit a subsequent affidavit in support of its position or refute any positive arguments in favor of the borrower’s response. If the creditor has failed to achieve a default judgment, the creditor is likely to file a summary judgment motion. A summary judgment petition can terminate the case if the creditor can prove that “there are no real issues of material facts and that he is entitled to a judgment under the law”. Most foreclosure cases end this way simply because the facts are not disputed and the right to a judgment is easily established by law. If the creditor prevails in a summary judgment or in court, if the judge has not made a summary judgment, then the creditor is given a final decision on foreclosure. The court decision sets the date for the sale of the foreclosure (usually within 60-90 days). The lender must publish in the newspaper two consecutive weeks before the sale the date and time of the foreclosure. Confirmation of this publication is necessary in order for all other parties to receive constructive notice of the sale. In the sale, the property is then sold to the highest bidder and the lender receives a loan on his bid until the final judgment amount. The borrower then has 10 days after the sale to file an objection in court, issuing a new title deed in the name of the winning bidder. After registering a new title deed with a clerk, the previous homeowner must vacate the property. If the landlord does not vacate the property, the new owner can evict the old landlord by filing a title deed and sending the property to the sheriff to comply with this order. The sheriff will issue a property order, notifying the previous landlord of the eviction 24 hours in advance. If the landlord does not move, the sheriff will physically force you to leave the premises.

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