Lien - United States

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 and the debtor:

  • mortgage
  • chattel mortgage

Nonconsensual liens typically arise by statute or by the operation of the common law. Those 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. Those 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;
  • maritime liens, imposed on ships by admiralty law.

Liens are also "perfected" or "unperfected" (see perfection). 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.

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