A lien is a legal claim or security interest granted over an item of property to secure the payment of a debt or the performance of some other obligation. It gives the creditor (the lienholder) the right to retain possession of the property until the debt is satisfied, and if the debtor fails to pay, the creditor may have the right to seize and sell the property to recover the owed amount
. Key points about liens:
- A lien can be voluntary (agreed upon by both parties, such as a mortgage lien) or involuntary (imposed by law or court judgment, such as a tax lien or mechanic's lien)
- The property subject to a lien usually cannot be sold or transferred by the owner without the lienholder's consent until the lien is cleared
- Liens serve as a form of security interest, ensuring creditors have a legal claim on property if debts are unpaid
- In common law countries, liens may be possessory (creditor holds the property until payment) or nonpossessory (creditor has a claim without holding possession)
- Examples of liens include mortgage liens, tax liens, mechanic's liens, and judgment liens
Etymologically, the word "lien" comes from the Latin "ligare," meaning "to bind," reflecting the binding nature of the creditor's claim on the property
. In summary, a lien is a legal right or claim on property used as collateral to secure a debt, allowing the creditor to hold or seize the property until the debt is paid off. It protects creditors by providing a legal mechanism to recover debts through the property if necessary
