The use of the lien is very common in the purchase or sale of a property when the owner acquires the property thanks to a charge, credit or loan, thus avoiding fraud. This article explains what is a lien and how they work within the legal or civil framework. In the same way, the types of lien are mentioned, including the mortgage. It also highlights the importance of the certificate of freedom from lien in a sale and purchase process and the possible repercussions of acquiring a property with lien.
What is a lien in civil law?
The purchase of a house, an apartment or any other property involves a complicated process, since it is necessary to have a significant amount of money to complete the transaction. However, there are some legal and legal procedures that allow you to complete a sale by paying the owner’s appraisal through the loans, credits and liens. So, the person receives a load of money to acquire a property or real estate, but also receives a responsibility to pay the debt.
A lien is a tax, contribution, or legal right that is imposed on a piece of property, which is usually real estate. Said charge is a guarantee to ensure that the person who owns the property pays a loan or credit that it acquired from a third person or banking entity.
How does the lien work?
There are agreements in which a banking entity makes a loan of money to a person, so that he can carry out the sale of a property. Likewise, there are also processes where a person acquires a property on credit, that is, they pay the full amount in parts. In both cases, the bank, the State or the seller must make sure that individual pays off the debt and there is no real estate fraud.
In this sense, to ensure said payment, contracts are created between those involved in which the property remains as a guarantee of payment. Thus, in case the person cannot cancel his debt, the lender have legal rights to the property to recover the money invested, for which a mortgage guarantee is presented.
In this way, a lien is a legal and juridical support in which it is established that the lender You will somehow get your money back. If the person cannot pay the debt, the entity acquires the property through the lien or can force the owner to sell it through a mortgage.
In the contracts and agreements for the loan of money with financial entities, it is also add some percentages, so the amount of money to pay is higher than the one received at the beginning. These percentages also help the debt to be paid off as quickly as possible, since they work over time.
Types of liens on a property
There are several types of liens that vary depending on factors, such as geography, taxes, or the entities that lend the money. In this way, each country, state, province or region can have a different real estate law that establishes variations in the payment rules. That is why you have to investigate very well before making a process of buying and selling a property.
The valuation contribution
This is a type of special tax intended for public works and constructions carried out in this type of works. Here a tax is applied to the property owners and owners that take advantage of or benefit from said construction of public works. For example, to the owners of premises or stores near a square.
Property tax
A property tax is imposed for assets located both in the countryside and in the city. The value is established according to the cadastre of the land, but also considers the environment in which the property is located and the structure itself. This charge must be paid annually and can only be executed by the person who owns the property.
The mortgage
A mortgage is a contract of legal law that acts as a guarantee or insurance for the fulfillment of an obligation. It is used to pay a debt in the form of a credit or bank loan. The mortgage is one of the most common methods and used in the purchase and sale of real estate such as houses and apartments.
It should be noted that the mortgage differs from other types of liens in the right to property when the debt is not paid. In this sense, if the person does not meet the payment terms, any creditor or lender has the right to collect their money as established by law. However, in other types of liens, the creditor can seize the property if you do not receive income, that is, you acquire the property as payment of the debt, loan or credit.
On the contrary, the mortgage works differently in this type of case, since the owner maintains the right to your property. However, to guarantee the repayment of the borrowed money, the creditor requests the sale of the property to a third party.
Occasional income or income tax
This type of lien is set taking into account the highest value at which the property was sold or purchased in the past, likewise, it considers the time that a person occupied said environment. The occasional income or income tax is generated due to an increase in the person’s income or assets in a calendar year.
Verify that the property does not have a lien
It is important to highlight that every buyer of a property must ensure that the property has the certificate of freedom lien or mortgage to avoid problems in the future. In the event that the property has a lien or some tax payable, it is possible to run the risk of a foreclosure.
If you are sold a property on which a lien was imposed, then the entity can seize said property. While, if the property has a mortgage, it is necessary to know this information, since this can reduce the initial priceso that the buyer is in charge of paying the bank.
Certificated of assessment fredom
The certificate of freedom from the lien exposes the legal and legal situation in which a property is located, for which reason it is exposed if there is a debt or legal problem before a financial institution. This certificate is valid for three months and the cost to obtain it may vary depending on the country and state where the property is located.
Among the steps that must be taken to obtain the certificate of freedom from liens, not having any debt stands out, therefore, it is necessary to pay any loan or credit obtained. Similarly, you have to do a application process in which a format is filled out with the corresponding data on the real estate and the signed contracts. There you have to describe the antecedent and registry owner, in addition to the address. Then it is necessary to make the payment of this registration in a public registry.