Legal Dictionary
Lien
Definition
A right to keep possession of property belonging to another person until a debt owed by that person is discharged.
Deep Dive
A lien is a legal claim or a right against property that is granted to a creditor until a debt owed by the owner is satisfied. Essentially, it serves as a form of security for a debt, ensuring that the creditor has a legal interest in the property should the debtor default on their obligations. Liens can be placed on various types of assets, including real estate, vehicles, and other personal property, making it difficult or impossible for the owner to sell or transfer the property without first clearing the debt.
Examples & Use Cases
- 1A bank places a mortgage lien on a property until the homeowner fully repays their home loan.
- 2A contractor files a mechanic's lien against a property owner who refused to pay for remodeling work.
- 3The IRS places a tax lien on an individual's assets due to outstanding federal tax liabilities.
Related Terms
CollateralEncumbranceSecurity Interest