Illinois Real Estate Practice Exam

What type of lien is usually created when someone takes out a mortgage loan?

1. Involuntary Lien

2. Statutory Lien

3. Mechanic's Lien

4. Lien

The correct answer is: Statutory Lien

The correct answer is that a statutory lien is typically created when someone takes out a mortgage loan. A statutory lien arises from a law or statute, and in the case of a mortgage, the creation of the lien is governed by state law. When a borrower secures a loan to purchase real estate, they agree to give the lender a claim against the property as collateral for the loan, which is codified in statutory laws. This lien is automatically attached to the property upon execution of the mortgage documents and is recorded in the public records. In contrast, an involuntary lien is imposed against an individual’s property without their consent, such as a tax lien or judgment lien. Mechanic's lien specifically applies to claims made by contractors or suppliers for unpaid work or materials provided for improvements on a property, not to loans secured by mortgages. The term "lien" itself is a broad classification that refers to any legal claim against a property, but does not specify the nature of the claim as clearly as "statutory lien" does in the context of mortgage loans.