If you bought a home and are still paying the mortgage, there is a lien against your property. The bank holds your title until you repay the loan. A lien is simply a legal retention of the property of someone else until that person has fulfilled a legal obligation -- usually, the payment of a debt. A civil lien is popular shorthand for a type of lien called a judgment lien.
Liens in Brief
Liens are created in one of three ways. First, a lien can be created explicitly by contract. A home mortgage is an example of a contractual lien. Second, a lien can be created by legal obligation. You are required to pay your taxes by law -- but if you fail to pay, the government can seize your property and sell it to get the money to pay those taxes. Third, a lien can be created by a judgment in civil court when a creditor sues for retention of property and/or the power to sell property for an unpaid debt. This last type is what some call a civil lien.
Criteria
For a court to award a civil lien to a creditor, a couple of criteria are generally necessary. The property against which the lien is requested must be owned wholly and exclusively by the debtor. There must be a reasonable prior understanding between the creditor and the debtor that the debt was owed. For example, if a mechanic repairs your car and you have not paid the bill, the mechanic can sue for retention of the car until the bill is paid, because there was a reasonable expectation of payment.
Retention and Power to Sell
Civil liens specify whether or not the creditor has the right of retention or the right of sale. In most cases, civil court judgments will award the creditor only the right of retention of the property until the debtor has had a reasonable opportunity to make restitution. If the debtor demonstrates an inability or an unwillingness to pay, the court can confer the power to sell. Foreclosure proceedings are petitions to the court by lenders for power-to-sell civil liens on real estate for which they already hold contractual liens.
Property, Priorities and Terms of Restitution
Civil liens are not broad claims against debtors. The lien is generally on property that bears a direct relation to the claimant. For example, if a mechanic repairs your car and you fail to pay, he can ask for a lien on the car -- not on the debtor’s house. Some liens involve more than one creditor; in these cases, the civil judgment must establish priorities of restitution. In the example of a home builder who has not paid his contractors or his bank loans, when the house is sold, the civil lien spells out whether contractors have priority of repayment ahead of the bank or vice-versa. Terms of restitution, including any interest payments, are spelled out in the court’s abstract of judgment.
