There is a word lenders and lawyers love to throw around. It pops up all the time in condo loan transactions. The word is LIEN.
A lien is defined as a security or an encumbrance upon property. Well that doesn't tell you much; but it is a good starting point. When you get a condo loan, you sign: a promissory note, which is a promise to pay the condo loan back; and a deed of trust or mortgage, which puts teeth in that promise to pay. Signing a deed of trust is like saying, "I'm really serious about paying this money back and if I don't, you can sell my house and get the money that way." A deed of trust or mortgage is a lien. It is a security blanket to the lender. He can sleep at night knowing he'll get his money back one way or another. And it is an encumbrance on your property because, until that condo loan is paid off, the property is encumbered, (burdened) by this loan. Once a lien attaches to a piece of property, it is like a bull dog and never lets go. Unless the condo loan is paid off, it will follow the property no matter how many times it is sold and resold. But practically speaking, nobody buys property with somebody else's lien on it. At one time, you could buy a condo and just take over the deed of trust that was already on it. But that didn't work out very well. The economy dipped and a lot of those condo loans went into condo foreclosure. So lenders stopped allowing new buyers to take over-or assume-the old condo loan with no questions asked. Now if you want to take over a condo loan that is already on the property, you have to go through a full loan application process. Most people just get a new lcondo oan and don't bother with all the hoops you have to jump through to assume an old condo loan.
A lien can be consensual or non-consensual. A condo deed of trust is a consensual lien, meaning you agreed to it. But sometimes a lien attaches to property whether or not you agree to it or even know about it. These are called non-consensual liens. If you don't pay your income taxes the IRS can record a tax lien which, when recorded on the public records, will attach to your property. If you don't pay the contractor who did work on your condo, the contractor can file a lien for his bill. If you don't pay your Condo Fees, HOA dues or HOA fees, the homeowners association or condo association can place a lien on your property for unpaid dues. First, you must owe someone money before they can exist; and second, their form and duration is set out, very specifically, in the condo law. If someone or some agency wants to file a lien against your property, they must follow very strict rules and except in rare cases, the lien will only last for a certain amount of time. But during the time it exists, it gives the party that owns it (the lienholder) a right to foreclose on your property.
