Comparing an equitable lien vs. equitable charge foreclosure
When it comes to understanding foreclosures, it’s essential to keep in mind that it’s not always the right solution for your home. You might hear the terms equitable lien or equitable charge used interchangeably as you navigate your foreclosure, which isn’t accurate. At Claim Surplus, we’re experts in equitable lien foreclosures and all the legal terminology that comes with them. You can learn more about equitable liens and equitable charges below as we outline the differences and similarities.
What is an equitable lien?
A lien and a charge are similar in that they’re a label applied to a debt that’s been secured. The difference is how the label is applied to the debt once it’s been secured. An equitable lien comes to be in one of three possible ways:
Imposed by law
Agreement of the parties involved
By virtue of a statute
Courts will put an equitable lien in place to prevent a homeowner from making money at the expense of their lender. For instance, if a homeowner decides to stop making their mortgage payment as a way to invest in a business, the courts can put a lien on the house, so the lender gets their money. An equitable lien is put in place until specific terms have been satisfied. Such terms can include paying the remainder of the mortgage or meeting other obligations as specified by the court.
What is an equitable lien foreclosure?
An equitable lien foreclosure happens when the borrower fails to meet the established obligations attached to the equitable lien. The lender can then collect the remainder of the loan. In the case of real estate, the house will go to auction for market value to ensure that the lender is paid in full.
What is an equitable charge?
Compared to the forceful nature of an equitable lien, an equitable charge is put in place as an agreement between two parties. The problem that many people face is that the equitable charge does not allow the homeowner to sell the house the lien has been placed on. Instead, they must go to the courts to request an order for sale. Once the order is granted, only then can the owner sell the house with the charge.
What is an equitable charge foreclosure?
Similar to an equitable lien foreclosure, the lender can take possession of the item or property if the terms of an equitable charge are not satisfied. The lender has the option to take ownership of the title and all associated documents. This allows the lender to sell the house at auction or to a private buyer.
When it comes down to it, the lender ultimately has the right to foreclose on any lien or charge placed on the property if the attached terms are not met.
Get in touch for more information
You can get more information about equitable lien foreclosure and everything that goes along with it by getting in touch with us at Claim Surplus. We have a team that’s filled with individuals who have decades of experience navigating foreclosures, so we can provide you with the information you need to get through yours. While we’re not a team of attorneys, we can help you hire one to fight for your rights as a homeowner during your foreclosure.
Give our office a call today at 407-759-6226 or send a message using our online contact form. We look forward to working with you.
