In law, a lien (UK: /ˈliːən/; US: /ˈliːn/) is a form of security interest A security interest is a property interest created by agreement or by operation of law over assets to secure the performance of an obligation, usually the payment of a debt. It gives the beneficiary of the security interest certain preferential rights in the disposition of secured assets. Such rights vary according to the type of security interest, granted over an item of property Property is any physical or intangible entity that is owned by a person or jointly by a group of persons. Depending on the nature of the property, an owner of property has the right to consume, sell, rent, mortgage, transfer, exchange or destroy their property, and/or to exclude others from doing these things. Important widely recognized types of to secure the payment of a debt Debt is that which is owed; usually referencing assets owed, but the term can also cover moral obligations and other interactions not requiring money. In the case of assets, debt is a means of using future purchasing power in the present before a summation has been earned. Some companies and corporations use debt as a part of their overall or performance of some other obligation. The owner of the property, who grants the lien, is referred to as the lienor and the person who has the benefit of the lien is referred to as the lienee.

The etymological Etymology is the study of the history of words, their origins, and how their form and meaning have changed over time root is Anglo-French lien, loyen "bond", "restraint", from Latin ligamen, from ligare "to bind".

In the United States ^ b. English is the de facto language of American government and the sole language spoken at home by 80% of Americans age five and older. Spanish is the second most commonly spoken language, the term lien generally refers to a wide range of encumbrances Encumbrance is a legal term of art for anything that affects or limits the title of a property, such as mortgages, leases, easements, liens, or restrictions. Also, those considered as potentially making the title defeasible are also encumbrances. For example, charging orders, building orders and structure alteration and would include other forms of mortgage or charge. In the USA, a lien characteristically refers to non-possessory security interests (see generally: Security interest—categories A security interest is a property interest created by agreement or by operation of law over assets to secure the performance of an obligation, usually the payment of a debt. It gives the beneficiary of the security interest certain preferential rights in the disposition of secured assets. Such rights vary according to the type of security interest,).

In other common-law Common law is law developed by judges through decisions of courts and similar tribunals , rather than through legislative statutes or executive branch action. A "common law system" is a legal system that gives great precedential weight to common law, on the principle that it is unfair to treat similar facts differently on different countries, the term lien refers to a very specific type of security interest, being a passive right to retain (but not sell) property until the debt or other obligation is discharged. In contrast to the usage of the term in the USA, in other countries it refers to a purely possessory form of security interest; indeed, when possession of the property is lost, the lien is released.^[1] However, common-law countries also recognize a slightly anomalous form of security interest called an "equitable lien" which arises in certain rare instances.

Despite their differences in terminology and application, there are a number of similarities between liens in the USA and elsewhere in the common-law world.

United States

Liens can be consensual or non-consensual (also termed voluntary or involuntary in different states) Consensual liens are imposed by a contract between the creditor A creditor is a party that has a claim to the services of a second party. It is a person or institution to whom money is owed. The first party, in general, has provided some property or service to the second party under the assumption (usually enforced by contract) that the second party will return an equivalent property or service. The second and the debtor:

• mortgage

• chattel mortgage Chattel mortgage is the legal term for a type of loan contract used in some states which have adopted the English law concept

Nonconsensual liens typically arise by statute This word is used in contradistinction to the common law. Statutes acquire their force from the time of their passage unless otherwise provided. Statutes are of several kinds; namely, Public or private. Declaratory or remedial. Temporary or perpetual. 1. A temporary statute is one which is limited in its duration at the time of its enactment. It or by the operation The phrase "by operation of law" is a legal term that indicates that a right or liability has been created for a party, irrespective of the intent of that party, because it is dictated by existing legal principles. For example, if a person dies without a will, his heirs are determined by operation of law. Similarly, if a person marries of the common law Common law is law developed by judges through decisions of courts and similar tribunals , rather than through legislative statutes or executive branch action. A "common law system" is a legal system that gives great precedential weight to common law, on the principle that it is unfair to treat similar facts differently on different. Those laws give a creditor the right to impose a lien on an item of real property Real property and personal property are the main classifications of property in the common law. Real property refers to land and the improvements made by human efforts—buildings, machinery, the acquisition of various property rights, and the like. Real property is also termed realty, real estate, and immovable property or a chattel Personal property, roughly speaking, is private property that is moveable, as opposed to real property or real estate. In the common law systems personal property may also be called chattels or personalty. In the civil law systems personal property is often called movable property or movables - any property that can be moved from one location to by the existence of the relationship of creditor and debtor. Those liens include

• tax liens A tax lien is a lien imposed by law upon a property to secure the payment of taxes. A tax lien may be imposed for delinquent taxes owed on real property or personal property, or as a result of failure to pay income taxes or other taxes, imposed to secure payment of a tax To tax is to impose a financial charge or other levy upon a taxpayer (an individual or legal entity) by a state or the functional equivalent of a state such that failure to pay is punishable by law;
• "weed liens" and "demolition liens", assessed by the government to rectify a property from being a nuisance and public hazard;
• attorney A lawyer, according to Black's Law Dictionary, is "a person learned in the law; as an attorney, counsel or solicitor; a person licensed to practice law." Law is the system of rules of conduct established by the sovereign government of a society to correct wrongs, maintain the stability of political and social authority, and deliver's liens, against funds and documents to secure payment of fees;
• mechanic's liens A mechanic's lien is a security interest in the title to property for the benefit of those who have supplied labor or materials that improve the property. The lien exists for both real property and personal property. In the realm of real property, it is called by various names, including, generically, construction lien. It is also called a, which secure payment for work done on property or land Real property and personal property are the main classifications of property in the common law. Real property refers to land and the improvements made by human efforts—buildings, machinery, the acquisition of various property rights, and the like. Real property is also termed realty, real estate, and immovable property;
• judgment A judgment , in a legal context, is synonymous with the formal decision made by a court following a lawsuit. At the same time the court may also make a range of court orders, such as imposing a sentence upon a guilty defendant in a criminal matter, or providing a remedy for the plaintiff in a civil law matter liens, imposed to secure payment of a judgment;
• maritime A sea generally refers to a large body of salt water, but the term is used in other contexts as well. Most commonly, the term refers to a large expanse of saline water connected with an ocean, and is commonly used as a synonym for ocean. It is also used sometimes to describe a large saline lake that lacks a natural outlet, such as the Caspian Sea liens, imposed on ships A ship ( Audio (help·info)) is a large vessel that floats on water. Ships are generally distinguished from boats based on size and cargo or passenger capacity. Ships may be found on lakes, seas, and rivers and they allow for a variety of activities, such as the transport of people or goods, fishing, entertainment, public safety, and warfare by admiralty law Admiralty law is a distinct body of law which governs maritime questions and offenses. It is a body of both domestic law governing maritime activities, and private international law governing the relationships between private entities which operate vessels on the oceans. It deals with matters including marine commerce, marine navigation, shipping,.

Liens are also "perfected" or "unperfected" (see perfection In law, perfection relates to the additional steps required to be taken in relation to a security interest in order to make it effective against third parties and/or to retain its effectiveness in the event of default by the grantor of the security interest. Generally speaking, once a security interest is effectively created, it gives certain). Perfected liens are those liens for which a creditor has established a priority right in the encumbered property with respect to third party creditors. Perfection is generally accomplished by taking steps required by law to give third party creditors notice of the lien. The fact that an item of property is in the hands of the creditor usually constitutes perfection. Where the property remains in the hands of the debtor, some further step must be taken, like recording a notice of the security interest with the appropriate office.

Perfecting a lien is an important part of the task of protecting the secured creditor's interest in the property. A perfected lien is valid against bona fide purchasers of property, and even against a trustee Trustee is a legal term for a holder of property on behalf of a beneficiary. A trust can be set up either to benefit particular persons, or for any charitable purposes : typical examples are a will trust for the testator's children and family, a pension trust (to confer benefits on employees and their families), and a charitable trust. In all in bankruptcy Bankruptcy is a legally declared inability or impairment of ability of an individual or organization to pay its creditors. Creditors may file a bankruptcy petition against a business or corporate debtor in an effort to recoup a portion of what they are owed or initiate a restructuring. In the majority of cases, however, bankruptcy is initiated by; an unperfected lien may not be.

Equitable lien (U.S.)

In the United States, references to an "equitable lien" is a right, enforceable only in equity Equity is the name given to the set of legal principles, in jurisdictions following the English common law tradition, which supplement strict rules of law where their application would operate harshly. In civil legal systems, broad "general clause" allow judges to have similar leeway in applying the code, to have a demand satisfied out of a particular fund or specific property without having possession of the fund or property. In U.S. law, such liens characteristically arise in four circumstances:^[2]

1. when an occupant of land, believing in good faith to be the owner of the land, makes improvements, repairs or other expenditure that permanently increases the land's value;
2. when one of two or more joint owners makes expenditures of the kind described above;
3. when a tenant for life completes permanent and beneficial improvements to the estate begun earlier by the testator A testator is a person who has written and executed a last will and testament that is in effect at the time of his/her death. It is any "person who makes a will."; and
4. when land or other property is transferred subject to the payment of debts, legacies, portions or annuities A life annuity is a financial contract in the form of an insurance product according to which a seller —typically a financial institution such as a life insurance company—makes a series of payments in the future to the buyer (annuitant) in exchange for the immediate payment of a lumpsum (single-payment annuity) or a series of regular payments ( to third persons.

Other common-law countries

Outside of the USA, a common-law lien may be defined in general terms as a passive right to retain a chattel (and, in certain cases, documentary intangibles and papers) conferred by law. Modern law has generally left the legal lien to cases where it has been historically established without any real effort being made to make it applicable to modern conditions. In Tappenden v Artus [1964] 2 QB 185 Diplock LJ referred to a lien as a "self help" remedy, like "other primitive remedies such as abatement of nuisance, self-defence or ejection of trespassers to land". Equitable liens are an unusual species of property right, usually considered sui generis Sui generis is a Latin expression, literally meaning of its own kind/genus or unique in its characteristics. The expression is often used in analytic philosophy to indicate an idea, an entity, or a reality which cannot be included in a wider concept.

Common-law lien

Common-law liens are divided into special liens and general liens. A special lien, the more common kind, requires a close connection between the property and the service rendered. A special lien can only be exercised in respect of fees relating to the instant transaction; the lienee cannot use the property held as security for past debts as well. A general lien affects all of the property of the lienor in the possession of the lienee, and stands as security for all of the debts of the lienor to the lienee. A special lien can be extended to a general lien by contract, and this is commonly done in the case of carriers.^[3] A common-law lien only gives a passive right to retain; there is no power of sale which arises at common law,^[4] although some statutes have also conferred an additional power of sale,^[5] and it is possible to confer a separate power of sale by contract.

The common-law liens are closely aligned to the so-called "common callings", but are not co-extensive with them.

A common-law lien is a very limited type of security interest. Apart from the fact that it only amounts to a passive right to retain, a lien cannot be transferred;^[6] it cannot be asserted by a third party to whom possession of the goods is given to perform the same services that the original party should have performed;^[7]; and if the chattel is surrendered to the lienor, the lien entitlement is lost forever^[8] (except for where the parties agree that the lien shall survive a temporary re-possession by the lienor). A lienee who sells the chattel unlawfully may be liable in conversion as well as surrendering the lien.^[9]

Equitable lien

In common-law countries, equitable liens give rise to unique and difficult issues. An equitable lien is a non-possessory security right conferred by operation of law, which is similar in effect to an equitable charge A security interest is a property interest created by agreement or by operation of law over assets to secure the performance of an obligation, usually the payment of a debt. It gives the beneficiary of the security interest certain preferential rights in the disposition of secured assets. Such rights vary according to the type of security interest,. It differs from a charge in that it is non-consensual. It is conferred only in very limited circumstances, the most common (and least ambiguous) of which is in relation to the sale of land; an unpaid vendor has an equitable lien over the land for the purchase price, notwithstanding that the purchaser has gone into occupation of the property. It is seen as a counterweight to the equitable rule which confers a beneficial interest in the land on the purchaser once contracts are exchanged for purchase.

It is a matter of conjecture how far equitable liens extend outside of the unpaid vendor's lien. Equitable liens have been held to exist in a number of cases involving choses in action, but not yet in relation to chattels.^[10] The Australian courts have been the most receptive towards equitable liens in relation to personal property (see Hewett v Court (1983) 57 ALJR 211, but a review of the cases still leaves a lack of clarity in relation to the principles upon which an equitable lien will be imposed.

• In Re Stucley [1906] 1 Ch 67 a vendor of a reversionary interest in a trust fund, who sold the interest to the trustee, was held to have an equitable lien in the subject matter, although it was clearly personalty and not realty.
• In Barker v Cox (1876) 4 Ch D 464 the purchaser of property which was included in a matrimonial settlement paid the price in advance to one of the trustees, and the purchaser was held to have an equitable lien in investments which the trustees subsequently acquired with the purchase price.
• In Langen and Wing v Bell [1972] Ch 685 a director's A board of directors is a body of elected or appointed members who jointly oversee the activities of a company or organization. The body sometimes has a different name, such as board of trustees, board of governors, board of managers, or executive board. It is often simply referred to as "the board." service agreement required him to assign his shares in the company In the United States, a company is a corporation—or, less commonly, an association, partnership, or union—that carries on an industrial enterprise." Generally, a company may be a "corporation, partnership, association, joint-stock company, trust, fund, or organized group of persons, whether incorporated or not, and any receiver, if he was terminated, and he was to receive a price calculated at a later date when the annual accounts were available; he was held to have an equitable lien over the transferred shares to secure the payment of the eventual purchase price.
• In Lord Napier & Etterick v Hunter [1993] 2 WLR 42 it was held that an indemnity insurer's subrogation More specifically, subrogation is the legal technique under common law by which one party, commonly an insurer of another party (X), steps into X's shoes, so as to have the benefit of X's rights and remedies against a third party such as a defendant (D). Subrogation is similar in effect to assignment, but unlike assignment, subrogation can occur rights in relation to funds improperly paid directly to the insured were subject to an equitable lien.

But overall, there is still perceived to be a lack of central nexus.^[11]

Statutory liens and contractual liens

Although arguably not liens as such, two other forms of encumbrance are sometimes referred to as liens.

Statutory liens

Certain statutes provide for a passive right to retain property against its owner as security for obligations. For example, section 88 of the Civil Aviation Act 1982 of the United Kingdom permits an airport to detain aircraft for unpaid airport charges and aviation fuel. Although this right has been treated as a lien under UK insolvency law,^[12] it has been argued that such statutory rights are not in fact liens, but rights analogous to liens,^[13] although some might say that this is a distinction without a difference.

Contractual liens

It has also been argued that an agreement by contract that one party may retain the goods of another party until paid is not a lien,^[14] as under the common law, liens could only be non-consensual. However, it appears that under insolvency law, such rights will be treated as liens even if they are not expressed to be liens.^[12]

Maritime liens

A maritime lien is a lien on a vessel, given to secure the claim of a creditor who provided maritime services to the vessel or who suffered an injury from the vessel's use. Maritime liens are sometimes referred to as tacit hypothecation. Maritime liens have little in common with other liens under the laws of most jurisdictions.

The maritime lien has been described as "one of the most striking peculiarities of Admiralty law Admiralty law is a distinct body of law which governs maritime questions and offenses. It is a body of both domestic law governing maritime activities, and private international law governing the relationships between private entities which operate vessels on the oceans. It deals with matters including marine commerce, marine navigation, shipping,".^[15] A maritime lien constitutes a security interest upon ships of a nature otherwise unknown to the common law or equity. It arises purely by operation of law The phrase "by operation of law" is a legal term that indicates that a right or liability has been created for a party, irrespective of the intent of that party, because it is dictated by existing legal principles. For example, if a person dies without a will, his heirs are determined by operation of law. Similarly, if a person marries and exists as a claim upon the property concerned, both secret and invisible, often given priority by statute over other forms of registered security interest.^[16] Although characteristics vary under the laws of different countries, it can be described as:

1. a privileged claim,
2. upon maritime property,
3. for service to it or damage done by it,
4. accruing from the moment that the claim attaches,
5. travelling with the property unconditionally,
6. enforced by an action in rem In rem is Latin for "in a thing". In a lawsuit, an action in rem is directed towards some specific piece of property, rather than being a claim for, say, monetary compensation against a person . It focuses on proprietary title to property. Land is an example of a case where, when the title (e.g. who owns a house) is in dispute, an in rem.^[15]

Show All>>

What Links Here:

Recently Viewed Pages:

• Home
• Lien: Encyclopedia
• Minnesota: Blogs
• Maryland: Blogs
• Dissaving: Blogs
• American Academy of Financial Management: Images
• Victoria: Images
• Florida: Shopping
• Mortgage Banking
• Dictionary

Most Popular Pages:

• Maryland: Blogs
• American Academy of Financial Management: Images
• Lien: Encyclopedia
• Minnesota: Blogs
• Victoria: Images
• Dissaving: Blogs
• Florida: Shopping
• Towergate Partnership: Blogs
• Louisiana: Answers
• Mortgage Banking

Related 'Lien' Searches: