Voluntary Lien
Definition and meaning of Voluntary Lien in real estate.
A voluntary lien is a legal claim placed against a property with the owner's explicit consent, typically as security for a debt.
In more detail
Homeowners agree to voluntary liens to secure financing for purchasing or improving a property. When a buyer signs mortgage documents at closing, they willingly grant the lender a lien on the home as collateral. This is in contrast to an involuntary lien, such as a tax lien or mechanic's lien, which is filed without the owner's consent due to unpaid bills.
Voluntary liens are recorded in public land records, creating a public notice that the property secures a debt. Before a property can be sold and title transferred, the seller must typically satisfy any voluntary liens.
Key facts
| Category | Legal, Titles & Closing |
|---|---|
| Common example | Mortgage or home equity line of credit |
| Consent required | Yes, must be willingly granted by the owner |
| Resolution | Typically paid off at closing to transfer clear title |
A buyer signs a mortgage agreement, creating a voluntary lien on the property that allows the lender to foreclose if payments are missed.
Frequently asked questions
What is the difference between a voluntary and involuntary lien?
A voluntary lien is created with the owner's consent, like a mortgage, while an involuntary lien is placed without consent, like a tax lien.
Can I sell a house with a voluntary lien?
Yes, but the outstanding debt secured by the voluntary lien is typically paid off using the proceeds from the home sale during closing.