When someone places a lien against the title to another person's property, such as a car or home, the lienholder has a financial interest that gives them certain rights to that property. When you take out a loan to buy something, for example, the lien documents the lender's right to reclaim the property through foreclosure or repossession if you default on the loan. Unsecured creditors, such as credit card companies, cannot place liens on the merchandise you buy. Liens remain in effect until you can prove that you have fulfilled all the loan's terms.
An example of lienholder authority is the requirement for insurance on the property secured by the lien. This protects the lienholder's financial interest. For example, if the property is damaged or destroyed, the insurance policy pays out to repair the car or house. This makes it more likely that the loan will be repaid and protects the lienholder's interest in the property.
Secured credit isn't the only reason for the placement of a lien. If you don't pay your income or property taxes, the government can attach a lien to your property, including your house, vehicles and even investments. A tax lien documents the government's right to seize your property and sell it to satisfy the debt you owe. Note that a lien is only the documentation of that right, where as a levy is the instrument by which the property is actually seized.
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