Lien
In
U.S. law,
lien is the broadest term for any sort of charge or
encumbrance against an item of
property that secures the payment of a
debt or performance of some other obligation.
Liens can be consensual or non-consensual. Consensual liens are imposed by a contract between the
creditor and the debtor. These liens include:
*
mortgages;
*
car loans;
*
security interests;
*
chattel mortgages;
*Property Improvements (
Mechanics lien)Non-consensual liens typically arise by
statute or by the
operation of the
common law. These laws give a creditor the right to impose a lien on an item of
real property or a
chattel by the existence of the relationship of creditor and debtor. These liens include:
*
tax liens, imposed to secure payment of a
tax;
*"weed liens" and "demolition liens", assessed by the government to rectify a property from being a nuisance and public hazard;
*
attorney's liens, against funds and documents to secure payment of fees;
*
mechanic's liens, which secure payment for work done on property or
land;
*
judgment liens, imposed to secure payment of a judgment
* liens, imposed on
ships by
admiralty law.Liens are also "perfected" or "unperfected" (see
Perfection (law)). 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 in
bankruptcy; an unperfected lien may not be.
* See also:
Security interest - lien
