A lien is a right that one party has to enforce payment from the real or personal property of another party. The concept of the lien is to create a way for the state, a judge, or by agreement between the parties to allow the party with the lien to be paid off for services rendered where the paying party has not paid or may pay in the future. A lien creates a legal right to repayment for the person or business holding the lien.
Liens are placed on property in different ways. For example, statutory liens may be fulfilled without the consent of the debtor because the lienholder (the party with the lien) acquires the lien simply by fulfilling all of the requirements of the state law. Judgment liens are created when a judge awards the lien to one party who then files the judgment in the corresponding Registry of Deeds or city or town clerk depending upon the nature of the property.
What Types of Lien’s Exist in Massachusetts?
There are three basic lien types:
1. Statutory Liens: These are liens created by statute, by the legislature of Massachusetts to create legal rights for individuals or businesses providing services or some benefit to one party in the event that the paying party to the transaction does not live up to its end of the bargain. Common statutory liens in Massachusetts include the Mechanic’s lien, tax liens, liens imposed by an attorney, and other types. With a statutory lien, if the lienholder meets notice and other requirements outlined in the applicable statute including recording the lien in the appropriate Registry of Deeds or with the required location, the lienholder will be able to demand payment for money owed.
2. Judgment Liens: These are liens in which a court typically awards the creditor title to the property of the debtor for failure to make payment. If the property involved in a judgment lien is real property (real estate), the lien must be recorded in the Registry of Deeds in which the property is located. If the property involved is personal property, paperwork will be filed with the city or town clerk.
In Massachusetts the judgment lien stays attached to the property of the debtor, even if the debtor sells the property (unless satisfied by payment) for a 30-day period if personal property, and a 20-year period for real estate.
3. Consensual Liens: Consensual liens are the kind where a person or business agrees to the lien as a condition of a loan or credit line. A mortgage (first or second) is a good example of a consensual lien because the homeowner agrees to allow the mortgagee (usually the bank) to place a lien on the home in return for the benefit of receiving funds to purchase the home or for other financial benefit to the homeowner.
Limits on Liens
Massachusetts has a homestead exemption law which allows homeowners to protect the home from creditors up to the limit of the exemption; $125,000 automatically, and up to $500,000 simply by filing a homestead exemption. Further, by filing for Chapter 7 bankruptcy, some liens are avoided.
Please read my article on “How to Remove a Lien from my Property in Massachusetts” for more information on removing liens on property.
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