Let us first understand the What is Lien Amount In the ordinary sense, a lien is such a right in the hands of the debtor (the lender). It can retain any property/amount of the creditor (the borrower), which is his possession until his outstanding balance is repaid. Let it happen.
When you see the “lien amount” on your savings account passbook, it is a surprise that the State Bank of India asks for this amount.
What is Lien Amount?
The lien is usually marked under the following conditions:
- When a charge becomes due, but due to insufficient balance in the account, the charge could not be recovered; hence, the lien is marked in the account for future recovery. Suppose your annual ATM maintenance fee which is Rs 200 / – per annum has become payable but if there is less than Rs 200 / – deposited in your savings account, then the lien will be marked in your savings account.
- If you have taken a loan from the bank and the installment is recovered from the savings account, then the lien will be marked if the installment amount is not available in the savings account.
- Instead of a term deposit, the lien is marked on the deposit receipt after the bank provides the loan facility.
- You cannot withdraw the amount deposited in the account till the “lien amount” without the bank’s permission.
- The lien is revoked by the bank when the dues are repaid.
The banks keep some part of the property in extras to ensure that the borrower is committed to repaying it. Lien (lien) gives them legal rights over such assets.
When a customer buys a property after taking funds from the bank, he has the right to sell the subsidiary property if the borrower is unable to pay the money.
When a customer who bought a house ten years ago decided to close his loan prematurely, the credit officer asked him to take the lien (lien) and NOC to withdraw the mortgage instead of taking the original property papers.
Initially, that customer did not know about this process. Later, he realized that the home loan should be scrapped very carefully so that there are no future problems, and the property gets free from the lien.
What is Mortgage Lien?
When a lender mortgages someone’s property until the balance is over, it is called a lien. A mortgage lien on a home loan gives your bank security on loan. If the loan is not repaid, the bank has legal right over the property.
Since the lender has a judicial legal right to your home, you must meet monthly obligations or prevent the risk of losing the property. When you pay all the dues, the lien is removed from the property, and there is no restriction on the property.
In such cases, the transfer rights on the mortgaged property are called a lien. In some case, if the borrower is unable to repay the loan, the lender can sell the mortgaged property to get the money back.
On the other hand, if the loan is repaid within the stipulated time, the lender signs a lien in favor of the borrower. That is, the property is wholly named after him.
Lien protects financial institutions against loans while offering to mortgage the property. In a case, if the borrower proves to be a defaulter, the bank has the legal right to sell the property to get the arrears back.
Apart from this, the customer cannot sell the property until the lien is removed. The home buyer should take back the lien after repaying the loan.
Let me tell you that the lien is registered in the local registrar’s office and the property cannot be written to anyone until its removal.
What is the Purpose of a Mortgage Lien?
When taking a home loan, means that you will pay the principal amount and EMI over a fixed period. A mortgage lien provides financial security to the lender if you fail to meet your monthly obligations.
For any default in EMI, the lender may charge late fees, while a mortgage lien for a bank or financial company is a powerful way to prevent a default on the borrower’s part.
Property/title deeds are proof of ownership of your home. At the same time, the lien is claimed against the property.
When you buy a house, the title firm evaluates the property to determine how many outstanding liens need to be settled, so that you can get a new title for the house.
Sometimes properties are sold without fully paying the mortgage loan. In such cases, the mortgage lien is often settled when the seller closes the sale. Sales proceeds are used to pay for home loans.
Mortgage Lien Foreclosure
The foreclosure on the mortgaged property occurs in three ways:
- When you repay the entire loan balance.
- At the time of pre-payment or property sale
- When the lender bans your property because you are unable to pay.
Foreclosure is the legal process through which the lender acquires a home based on the loan contract terms.
This process starts when you cannot repay many EMIs, and the lender sends you the prior notice. After this, you have to repay the entire loan or on the property.