What is a Lien?

Definition of a Lien

In the home-buying process a lien is generally a legal claim on real estate which allows the holder (of the lien) to collect a specified amount when the property is sold. These exist to satisfy unpaid debts and can be a headache for those attempting to sell their home as they will either not get the funds they need or they will need to increase the selling price of their house (reducing its chances of selling).

The surest way to remove a lien from one’s property is to pay the outstanding debt.

The most common reason for the existence of a lien results from municipal governments (ie. the city/county/town, etc) looking to collect unpaid property taxes. In other cases it may be a contractor attempting to collect on amounts owed for work that was done.

According to Service Alberta:

“Security interests and other registrations pertaining to personal property can be registered online. Registration records the interest the creditor/secured party has in the personal property of a debtor. A creditor/secured party's registration provides registration priority and allows other persons to search to discover the existence of a registered interest in personal property. “

Who can Place a Lien?

Essentially, anyone can create a lien on the property, but there must be sufficient grounds and that claim must be made in “good faith” otherwise it may not be valid. If this is the case a court can remove the lien if it is made fraudulently, under duress, or obtained through other unlawful means. It is best to consult a lawyer about these issues as the underlying matters may be fairly complex.

To mitigate the risk of running into these headaches it may be helpful to purchase title insurance, however you should have that conversation with your real-estate lawyer.

If you are delinquent in paying your property taxes, your city might place a lien against the title of your home for the amount outstanding.

Related Terms

If you would like to know more about a lien and how it relates to you, please contact us anytime!

Last updated Oct 29, 2018