A lien is a security instrument that a lender or service provider can attach to a property. This, in effect, turns the property into collateral until the outstanding loan balance is paid. Consensual liens are applied with a mortgage, and especially second mortgages; a mechanics lien is for funding property improvements.

Also, a lien may be placed non-consensually. This is frequently done by tax authorities to ensure payment of penalties or outstanding taxes, or by courts to ensure payment of judgments against the property holder. There is a wide variety of liens that have different effects on properties. However, most liens have three main results.

The corollary to having a lien placed against a property is that under certain conditions the creditor has means to take control of the property. While most of the time in the United States, a lien does not mean that a creditor will take control of the property but it can sometimes. There are many different kinds of liens and they spell out whether or not a creditor will be taking control of the property. The ultimate reason for placing a lien is not to take over a property but to create collateral for the person who is owed money. It is important to not that most leans are exempt from being discharged in a bankruptcy.

The second side effect is closely tied to the first one: A lien makes it almost impossible for the property in question to be sold or to otherwise have ownership transferred to another person. Because the lien means that the property is collateral for another person the official owner can no longer act independently to sell or transfer ownership of the property under lien. Moreover, many lenders or prospective purchasers are not interested in properties that have liens placed against them. The legal owner is basically tied down by his previous commitments.

Another consequence of non-consensual liens is lasting in nature. A lien will usually have a negative effect on a persons credit score. On the credit report the lien is treated as an unpaid debt. Even having just one lien placed can drastically and quickly reduce the credit score of the debtor. If the dollar amount of the lien along with fees, interest and penalty amounts is satisfied then the lien can be released. The lien is then shown as past history instead of a current debt. A lien report will generally show on a credit report for seven years, just like other negatives reported.

Having a non-consensual lien placed against ones property can be a real problem and should be avoided if at all possible. Because most U.S. states have their own laws related to liens, many of which make it extremely easy to file a non-consensual lien on someone elses property, these devices have frequently been abused. Despite this abuse, a lien can still be a nightmare for property owners. It is strongly advised to be wary of liens and to take threats of having them imposed very seriously.

Wendy Polisi is the founder of Credit Repair College and Finance the Dream. Credit Repair College empowers people to take control of their financial future by learning everything they need to know to repair credit on their own. For more information on how to fix credit report please visit them on the web. Finance the Dream offers rent to own houses throughout the United States.