Lien is a right exercised by one on someone else property for a debt or charge. It is the right of a person who has lawfully received property belonging to another to retain that property for so long as a debt owed by the owner of the property remains unpaid. It means – a right to keep possession of property belonging to another person until a debt owed by that person is discharged. It is a legal right to claim a security interest in a property provided by the owner of the property to the creditor. It is generally used as a guarantee for some sort of legal obligation such as loan repayment.

lien is a form of security interest granted over an item of property to secure the payment of a debt or performance of some other obligation. The owner of the property, who grants the lien, is referred to as the lienee[3] and the person who has the benefit of the lien is referred to as the lienor[4] or lien holder.

The etymological root is Anglo-French lienloyen “bond”, “restraint”, from Latin ligamen, from ligare “to bind”.

In the United States, the term lien generally refers to a wide range of encumbrances and would include other forms of mortgage or charge. In the US, a lien characteristically refers to nonpossessory security interests (see generally: Security interest—categories).

In other common-law 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 US, 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.[5] 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 US and elsewhere in the common-law world.

Liens may be recognized by common law or may be created by contractual agreement. The definition of a lien is a claim on property as security to make sure someone repays money they’ve borrowed. It could be established by a creditor or a legal judgment. It serves to guarantee an underlying obligation, such as the repayment of a loan. If the underlying obligation is not satisfied, the creditor may be able to seize the asset that is the subject of the lien. An example of a lien is a payment agreement for a car loan. The loan document includes provisions that allow the lender to keep you from selling the car until you pay what you owe.

Types of Liens

Particular Liens – These only apply to secure the debt arising from a particular transaction, rather than a series of transactions. The lien secures the property of the creditor for the sum due to be paid under the transaction. Categories of liens recognized by law include those between:

  • transporters
  • architects
  • accountants
  • printers
  • tailors and
  • dry-cleaners.

General Liens – These, on the other hand, secure property for all of the sums owed by the debtor. These may be important in insolvency situations, as they may take priority over the rights of other creditors who the debtor is owed money. Categories of liens recognized by law include those between:

  • stockbrokers and clients
  • bankers and customers
  • hoteliers and guests
  • factoring companies
  • warehousing companies and customers.