What Is A Specific Lien In Real Estate?

When it comes to real estate, there are a variety of different liens that can be placed on a property. The two most common types of liens are general and specific.

A general lien is one that doesn't attach to a specific piece of collateral. Instead, it attaches to all the assets of the borrower. This includes their house, bank accounts, vehicles, and any other personal property the borrower may own.

An IRS tax lien is typically a general lien since they have the authority to sell a variety of the owner's property in order to recover the debt. In contrast, a specific lien is one that attaches to a specific asset.

For example, a mortgage bank has a lien on the piece of real estate they financed the purchase of. In a specific lien, the asset was specifically offered as collateral in exchange for the loan or credit.

While general and specific liens are the two most common types, there are also a few other variations that can exist. It's important to understand the different types of liens that can be placed on a property, as this can help you on your real estate exam.

Voluntary vs. Involuntary Liens

Another way to categorize liens is by voluntary or involuntary.

A voluntary lien:

Is one where the borrower has agreed to use their property as collateral for a loan. The most common type of voluntary lien is a mortgage, which is when a borrower offers their home as collateral for a loan from the bank.

An involuntary lien:

Happens when the borrower has not agreed to use their property as collateral. The most common type of involuntary lien is a tax lien, which is placed on a property when the owner owes back taxes to the government.

First vs. Second Liens

Another important distinction to make is between first and second liens. A first lien is the primary loan on a property and has priority over all other liens. This means that if the borrower defaults on their loan, the lender with the first lien will be paid off before any of the other lenders.

A second lien is a secondary loan on a property and has a lower priority than the first lien. This means that if the borrower defaults on their loan, the lender with the second lien will only be paid off after the lender with the first lien has been paid in full.

It's important to understand the different types of liens that can be placed on a property, as this can help you on your real estate exam.

Conclusion

In conclusion, there are a variety of different liens that can be placed on a property. The two most common types of liens are general and specific. General liens attach to all the assets of the borrower, while specific liens only attach to one specific asset. There are also a few other variations of liens, such as voluntary and involuntary, and first and second liens. Understanding the different types of liens can help you pass your real estate exam.

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