What is the difference between a lien and a security interest?

A lien and a security interest are two different types of financial interests in a property. In Florida, a lien is a legal right to hold someone else’s property as security for a debt or obligation. The property can be real estate such as a house, or personal property, such as a car or boat. A lien can be created by a court order or contract agreement. A security interest is a different type of financial interest in a property. It is a contractual right to take possession of or to sell the property if certain conditions are not met. A security interest is created when one party lends money or provides certain services and the other party signs a contract agreeing to make regular payments. This type of agreement is often used when a lender loans money to a borrower for the purchase of real estate. Both a lien and a security interest give a creditor a claim to a property if the debtor fails to fulfill the terms of the agreement. However, a security interest is a contractual right, while a lien is a legal right. A lien can only be created by filing a lien with the local court, while a security interest is created when a contract is signed. In Florida, liens generally have priority over security interests.

Related FAQs

What is a short sale?
What are the laws governing real estate contracts?
What remedies are available to me if I am a victim of real estate fraud?
What is a due on sale clause?
What is the role of a real estate broker in a real estate transaction?
What is a title search?
What are the duties of a closing agent?
What are the disclosure requirements when I rent out property?
What is an estoppel certificate?
What is the difference between a condo and a cooperative?

What is the difference between a lien and a security interest?

Related FAQs

Related Blog Posts