2/28 Adjustable-Rate Mortgage (2/28 ARM)

What is a privilege

A lien is a legal right granted by the owner of property, by law or otherwise acquired by a creditor. A lien is used to secure an underlying obligation, such as the repayment of a loan. If the underlying obligation is not met, the creditor may be able to seize the asset that is the subject of the lien.




Once executed, a lien becomes the legal right of a creditor to sell the property as collateral for a debtor who does not honor the obligations of a loan or other contract. The property subject to a lien cannot be sold by the owner without the consent of the holder of the lien. A floating lien refers to a lien on inventory or any other unsecured property.

Practical examples of links

A lien is often granted when an individual takes out a loan from a bank to buy an automobile. The individual purchases the vehicle and pays the seller using bank funds, but grants the bank a lien on the vehicle. If the person does not repay the loan, the bank can execute the lien, seize the vehicle and sell it to repay the loan. If the individual repays the loan in full, the lien holder (the bank) then releases the lien, and the individual owns the lien free property.

Another type of lien is the lien of a mechanic, who can be attached to a building if the owner does not pay a contractor for the services rendered. If the debtor never pays, the property can be auctioned off to pay the lien holder.

Links and taxes

There are also several statutory privileges, that is, privileges created by law, as opposed to those created by contract. These privileges are very common in the area of ​​taxation, where laws often allow tax authorities to put liens on the property of delinquent taxpayers. For example, municipalities can use liens to recover unpaid property taxes.

In the United States, if a taxpayer becomes an offender and demonstrates no indication of payment of taxes due, the IRS can file a legal claim against the property of a taxpayer, including his home, vehicle and bank accounts. A federal tax lien takes precedence over all other creditors’ claims and can lead to the sale of a sheriff. It also affects the taxpayer’s ability to sell existing assets and obtain credit. The only way to release a federal tax lien is to pay the tax owed in full or to settle with the IRS. The IRS has the power to seize the assets of a taxpayer who ignores a tax lien.

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