Meaning of Lien

What is Lien:

It is called a lien to the tax or charge that is applied on an asset, wealth or property that belongs to a person and to indicate that it is compromised.

It also refers to the type of tax, which is the taxable rate, through which a tax quota is generated that can be fixed or variable, and that supposes a tax applicable to any property.

A common example of a lien are the documents that a person signs in relation to a Home Equity Loan, in which a property is given as guarantee of payment, until the moment in which the entire debt is paid.

The word lien derives from Latin assessment, and means "load."

The term lien is applied depending on the branch of law in which it is used, which can be civil, fiscal, commercial, among others.

For example, in the commercial area, the tax refers to the control of relationships between people, contracts and commercial actions.

In general, the function of liens is to finance the creditor's expenses. For example, the State has a number of expenses that it must face in order to fulfill a series of political, economic and social responsibilities.

In this case, the money collected through the levies is used to cover the expenses corresponding to the public administration, the educational system, the health system, among others.

However, according to the legislation of each country, different percentage rates are established in terms of the taxes that people must pay. These may have a higher or lower percentage according to what the law dictates and, there will even be commercial activities whose taxes will be minimal in order to boost economic activity.

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