Some creditors—such as home mortgage lenders and automobile lenders—require the borrower/debtor to secure or collateralize the loan with the property being purchased. If the debtor defaults and fails to timely make the payments on the loan, this type of secured loan agreement allows the lender to foreclose on or seize the property (real estate or automobile) and sell it to repay the loan. In other words, in the loan agreement, the debtor voluntarily gives the creditor a lien on the property (a voluntary lien).
But many creditors are unsecured creditors—meaning their agreement with the debtor does not expressly provide for a lien on any property to secure payment of the debt. These creditors must generally file a lawsuit and secure a judgment against the debtor—or follow other processes prescribed by law—in order to place a lien on any of the debtor’s property, such that the creditor can force the sale of the property to satisfy the lien. Such a lien is broadly known as an involuntary lien.
Credit card companies, utility companies, cellular phone service providers, and hospitals who provide medical services are examples of unsecured creditors whose extensions of credit are not secured by a voluntary lien, but who may be able to secure an involuntary lien.
Similarly, governmental entities—such as counties that assess property taxes and the Internal Revenue Service (IRS) that collects federal income taxes—may place involuntary liens on property to satisfy tax obligations.
Contractors who provide labor or materials to improve real estate (home construction or remodeling)—and auto mechanics who service and repair automobiles—may file an involuntary mechanic’s and materialman’s lien to secure payment for the materials and labor.
And in some states, a parent, current or former spouse, or the state may place involuntary liens on property to secure payment of child support obligations or marital property obligations.
In Texas, secured loan agreements, such as those for home mortgages and automobile loans, allow lenders to place a voluntary lien on the purchased property. If the borrower defaults, the lender can foreclose on real estate or repossess and sell an automobile to recover the debt. Unsecured creditors, like credit card companies and hospitals, do not have such liens and must pursue legal action to obtain a judgment to place an involuntary lien on the debtor's property. This enables them to potentially force a sale to satisfy the debt. Government entities can impose involuntary liens for unpaid taxes, and contractors can file mechanic's and materialman's liens for unpaid labor or materials provided for property improvements. Additionally, involuntary liens can be placed on property for unpaid child support or marital property obligations. Texas law outlines specific procedures for each type of lien, including how they are filed, enforced, and satisfied.
