Quick answer
A lien is a legal claim against a property that secures a debt, giving the creditor the right to be paid from the property — through foreclosure or when it’s sold — if the debt isn’t repaid. Your mortgage or deed of trust creates a voluntary lien; others, such as tax or court-judgment liens, can attach without your agreement.
Lien priority
Liens are generally paid in order of priority, which usually follows the order they were recorded — that is why a home equity loan or HELOC taken after your mortgage is called a second or junior lien. Property tax liens are a common exception and typically jump ahead of mortgages.
Who gets paid in a foreclosure sale
A home sells for $300,000 (before costs) with a $280,000 first mortgage and a $40,000 second. The first lender is paid $280,000 in full; the second receives only $20,000 of the $40,000 it’s owed.
Priority is also why refinancing a first mortgage while keeping a HELOC needs the HELOC lender to sign a subordination agreement.
Clearing a lien
Before closing, a title search looks for liens on the property, and existing ones must be paid off or released for the buyer to get clear title — which title insurance backs up. When you pay off a loan, the lender should record a release (a satisfaction of mortgage or a reconveyance); check the county records. The home equity risks guide explains what a second lien adds.
Related terms
Sources
Last reviewed Figures are checked against the sources above. Read our editorial policy. This page is general information, not financial advice — see the disclaimer.