A lien (/ˈliːn/ or /ˈliːən/) is a form of security interest granted over an item of property to secure the payment of a debt or performance of some other obligation. The owner of the property, who grants the lien, is referred to as the lienee and the person who has the benefit of the lien is referred to as the lienor or lien holder.
The etymological root is Anglo-French lien or loyen, meaning "bond", "restraint", from the Latin ligamen, from ligare "to bind".
A mortgage loan or simply mortgage (/ˈmɔːrɡɪdʒ/), in civil law jurisdictions known also as a hypothec loan, is a loan used either by purchasers of real property to raise funds to buy real estate, or by existing property owners to raise funds for any purpose while putting a lien on the property being mortgaged. The loan is "secured" on the borrower's property through a process known as mortgage origination. This means that a legal mechanism is put into place which allows the lender to take possession and sell the secured property ("foreclosure" or "repossession") to pay off the loan in the event the borrower defaults on the loan or otherwise fails to abide by its terms. The word mortgage is derived from a Law French term used in Britain in the Middle Ages meaning "death pledge" and refers to the pledge ending (dying) when either the obligation is fulfilled or the property is taken through foreclosure. A mortgage can also be described as "a borrower giving consideration in the form of a collateral for a benefit (loan)".
Mortgage borrowers can be individuals mortgaging their home or they can be businesses mortgaging commercial property (for example, their own business premises, residential property let to tenants, or an investment portfolio). The lender will typically be a financial institution, such as a bank, credit union or building society, depending on the country concerned, and the loan arrangements can be made either directly or indirectly through intermediaries. Features of mortgage loans such as the size of the loan, maturity of the loan, interest rate, method of paying off the loan, and other characteristics can vary considerably. The lender's rights over the secured property take priority over the borrower's other creditors, which means that if the borrower becomes bankrupt or insolvent, the other creditors will only be repaid the debts owed to them from a sale of the secured property if the mortgage lender is repaid in full first.
A factor is a type of trader who receives and sells goods on commission, called factorage. A factor is a mercantile fiduciary transacting business that operates in their own name and does not disclose their principal. A factor differs from a commission merchant in that a factor takes possession of goods (or documents of title representing goods, such as a bill of lading) on consignment, but a commission merchant sells goods not in their possession on the basis of samples.
Most modern factor business is in the textile field, but factors are also used to a great extent in the shoe, furniture, hardware, and other industries. The number of trade areas in which factors operate has increased. In the United Kingdom, most factors fall within the definition of a mercantile agent under the Factors Act 1889 (52 & 53 Vict. c. 45), and therefore have the powers of such. A factor has a possessory lien over the consigned goods that covers any claims against the principal arising out of the factor's activity.
In law, conveyancing is the transfer of legal title of real property from one person to another, or the granting of an encumbrance such as a mortgage or a lien. A typical conveyancing transaction has two major phases: the exchange of contracts (when equitable interests are created) and completion (also called settlement, when legal title passes and equitable rights merge with the legal title). The electronic execution of conveyancing processes and documents is known as e-conveyancing.
The sale of land is governed by the laws and practices of the jurisdiction in which the land is located. It is a legal requirement in all jurisdictions that contracts for the sale of land be in writing. An exchange of contracts involves two copies of a contract of sale being signed, one copy of which is retained by each party. When the parties are together, both would usually sign both copies, one copy of which being retained by each party, sometimes with a formal handing over of a copy from one party to the other. However, it is usually sufficient that only the copy retained by each party be signed by the other party only — hence contracts are "exchanged". This rule enables contracts to be "exchanged" by mail. Both copies of the contract of sale become binding only after each party is in possession of a copy of the contract signed by the other party—i.e., the exchange is said to be "complete". An exchange by electronic means is generally insufficient for an exchange, unless the laws of the jurisdiction expressly validate such signatures.
In contract law, a simple contract, also known as an informal contract, is a contract made orally, in writing, or both, rather than a contract made under seal. Simple contracts require consideration to be valid, but simple contracts may be implied from the conduct of parties bound by the contract.
In his Commentaries on the Laws of England William Blackstone observed that in the seventeenth century, debtors used simple contracts as one of three accepted forms of unsecured debt instruments. In 1828, the Parliament of the United Kingdom amended the statute of frauds so that oral acknowledgments or promises could not be used as evidence to prove the existence of a simple contract. Today, some American jurisdictions have established that a security interest is perfected "when a creditor on a simple contract cannot acquire a judicial lien that is superior to the interest" of the secured party.
An encumbrance is a third party's right to, interest in, or legal liability on property that does not prohibit the property's owner from transferring title (but may diminish its value). Encumbrances can be classified in several ways. They may be financial (for example, liens) or non-financial (for example, easements, private restrictions). Alternatively, they may be divided into those that affect title (for example, lien, legal or equitable charge) or those that affect the use or physical condition of the encumbered property (for example, restrictions, easements, encroachments). Encumbrances include security interests, liens, servitudes (for example, easements, wayleaves, real covenants, profits a prendre), leases, restrictions, encroachments, and air and subsurface rights.
A mortgage is a legal instrument of the common law which is used to create a security interest in real property held by a lender as a security for a debt, usually a mortgage loan. Hypothec is the corresponding term in civil law jurisdictions, albeit with a wider sense, as it also covers non-possessory lien.
A mortgage in itself is not a debt, it is the lender's security for a debt. It is a transfer of an interest in land (or the equivalent) from the owner to the mortgage lender, on the condition that this interest will be returned to the owner when the terms of the mortgage have been satisfied or performed. In other words, the mortgage is a security for the loan that the lender makes to the borrower.
Cash out refinancing (in the case of real property) occurs when a loan is taken out on property already owned in an amount above the cost of transaction, payoff of existing liens, and related expenses. Strictly speaking, all refinancing of debt is "cash-out," when funds retrieved are utilized for anything other than repaying an existing loan.
In the common usage of the term, cash out refinancing occurs when equity is liquidated from a property above and beyond sum of the payoff of existing loans held in lien on the property. This is often done when the value of the property has increased allowing the mortgagor to increase their mortgage taking cash out to spend on other things.
In property law, the term free and clear refers to ownership without legal encumbrances, such as a lien or mortgage. For example: a person owns a house free and clear if he has paid off the mortgage and no creditor has filed a lien against it.
Lately there has been a resurgence in interest for free and clear properties despite being an investment form that has been prevalent from early on. Investing in free and clear properties removes the need for a bank loan entirely. Over 35% of all properties in the United States are owned free and clear with no outstanding mortgages or liens.