The most important factor in determining whether a lien is a property or a judgment lien on real property is how the creditor obtained the claim. Creditors generally get property liens with your permission. On the other hand, creditors obtain judgment liens as a consequence of a lawsuit brought against you for a debt you owe.
Understanding a Property Lien
Most people take out a loan to purchase a house. When they take out this loan, they must sign what is called a promissory note that states that they will pay back the money used to buy the house based on specific terms.
The lender needs something to mitigate the risk when lending you money because the amount you borrow is so enormous. How they do this is by making a property lien a condition of the finance agreement. This is often referred to as the deed of trust. It allows the lender to foreclose on your home if you don’t make the payments as agreed upon.
Understanding a Judgment Lien
A judgment lien on real property is different from a property lien because it is only awarded when somebody wins a lawsuit against you. One of the interesting things about judgment liens is how often they are used because creditors have several ways to collect a debt.
Most creditors use a judgment lien because it has a higher chance of being paid off, as they attach the lien to real property, as the property can’t be sold until the lien is taken care of. Another option they have is to sell the lien to a place such as Mayflower Judgments.
