The Expert Podcast

…This question comes up a lot with real estate and with building. And what is the difference between a foreclosure. And a lien. Or even a judgment. And a foreclosure…The two. Processes are part of debt recovery on real estate And remember we're not attorneys we're not giving you legal advice So make sure you take this with a grain of salt. And also leave some comments below let us know what you think about this subject. A lien or judgment is a claim. Of debt or a claim of right against real estate. So if you have a lien against the property. You have a document that's filed with their county recorder that says I am claiming. right of ownership or a right of asset against this A piece of real estate. In order to. Satisfy either a debt. Maybe a judgment at a court litigation, maybe a mortgage, a mortgage is a type of a lien. So if you sign a mortgage to buy a house or to get a second mortgage, the mortgage company files a mortgage lien against your house It basically says, look we have rights for this house in order to get our mortgage paid…If you have a. Repair or improvements. Or remodel on your house and you don't pay the contractor. They're going to file a lien against your house that says. I have a claim of right on this real estate because this person didn't pay my bill…That's there they're leveraged to get you to pay…It also means that you can't sell the house and walk away with the cash because before the property can convey. To the next owner that lien has to be satisfied…So if you have a lien on your house…And you want to sell it whatever the amount of that lien is that cash is going to be removed from your sales proceeds in order to clear off that lien So the buyer gets clear title…What does a foreclosure. foreclosure is when a lien holder. Decides. They're going to take action…Too. Strip you have ownership of the house. So a lien can be at a house. Forever…foreclosure is what. Pushes that lien. In order to. Get proceeds to come from a sale now not every lien can be foreclosed. If you have a second or third or fourth lien. If you foreclose that lien you have to pay off the mortgages and liens ahead of you…However, if you foreclose on a lien and a tax debt the tax lien can also foreclose. The property is typically at that point. Offered for public auction. In the foreclosure…And the buyer of that property has to pay whatever the bid is and the money is then distributed. In order of lien priority. So if there's three lien holders on a house a first mortgage, a line of credit and a tax lien, the house is sold at auction. Normally it goes in order of priority. Of filing. First mortgage gets the money first, then the, Line of credit and then liens however, Some municipal liens like tax liens or HOA and not hos but, municipal utilities. If the utility company is part of the government…Those lanes sometimes jump ahead and that money comes to them first…Some liens can't be foreclosed meaning that if you live in a primary resident and that's your main place of living…Liens other than a first mortgage many times can't be foreclosed Like they can't kick you out of your house for not paying your credit card Bill…Right If visa sues you and gets a lien against you for 4,000 cause you did not pay your credit card bill, they can slap that lien on your house, but they can't kick you out of your house for that late only the first mortgage some. Second mortgages can do that…So the easy answer is a lean is the beginning of a foreclosure…If you have a debt. That's not paid It becomes a lien And if you have a lien that becomes unsatisfied. It can become a foreclosure. And the owner of the house. I'm sorry The owner of that. debt can take the house away from the current owner the current resident…Some of these particulars vary from jurisdiction state to state. But the general mechanism is. It goes debt. lien,, foreclosure in that order of seriousness. Tell us what you think. If you're involved with one of these processes make sure you get qualified legal advice Don't take the Internet's word for anything that this is important, but it's good. Basic information for you to understand the difference between those terms.