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A security interest in one or more assets that lenders hold in exchange for secured debt financing.


The ability of a lender to sell the collateral if the borrower defaults on a loan. For example, if a loan is secured by one house, the bank or other lender has a lien on the house. It may foreclose and sell the house if the borrower does not make payments in a timely manner. A lien makes a loan less risky for the lender and may entitle the borrower to a lower interest rate or even a higher line of credit. See also: Secured Bond, Mortgage.


The legal right of a creditor to sell mortgaged assets when the debtor is unable or unwilling to meet requirements of a loan agreement. A lien makes a bondholder's claim more secure.


A lien exists when you owe money to a lender on a particular vehicle or other asset, such as real estate, that has been used as collateral on a loan.

An asset on which there's a lien can't be sold until the lienholder has been repaid. When you own an asset on which there's a lien, you risk having it repossessed if you default and don't make the required payments in full and on time.


A legally enforceable claim on the property of another as a result of a debt or obligation. It may be voluntary,such as a mortgage,or involuntary,such as a tax lien.It may be general,such as a judgment lien on all property within a county,or specific,such as a mortgage lien on the described property. One of the most important concepts in lien law is the priority among competing liens if property is insufficient to pay all claims or if the owner files for bankruptcy.The general rules are as follows (however,there may be local variations among the various states):

1. The first lien to be recorded is paid first, and so on in the order of recordation.

2. A statutory lien, such as a mechanics' and materialmen's lien, may be given artificial priority even though recorded after another lien.

3. Lien priority may be reshuffled if a debtor files for bankruptcy. The rules are too complex to examine here.

4. Lien-stripping takes place in bankruptcy when an asset is not worth as much as the accu- mulated liens placed upon it. Junior lienholders are stripped out and turned into unse- cured creditors. Even mortgage liens may be reduced in amount, if the real estate is not worth as much as the loan balance.

5. A landlord's statutory lien for unpaid rent can be avoided, or set aside, by a bankruptcy trustee, but a landlord's contractual lien cannot be avoided unless lien-stripping comes into play.

References in periodicals archive ?
A broadly accepted nonbankruptcy proceeding includes one where a lienholder can be forced to accept a monetary satisfaction through the process of foreclosure.
In this circumstance, managers might beef up earnings to maintain a particular ratio of assets to liabilities required by a lienholder.
To avoid foreclosure, owners will have to keep up future payments to the city, as well as the payments to the lienholders.
According to Walter Challenger, Princeville's new CEO, the resort's first priority is to settle its debts with lienholders and creditors, and to remobilize the crews on the Sheraton Mirage Princeville and the resort's two golf courses.
paragraph] As a result of this ruling, well-drafted agreements for deeds in lieu of foreclosure may substantially benefit lenders and senior lienholders in California.
Not ice of the recording of the Plan is sent to all owners and lienholders.
Steube said other lienholders, such as homeowners or condominium associations, should be able to ask the court to move a foreclosure case along.
122) The plan would (1) provide monthly incentive fees to servicers who complete successful modifications, (2) payments to second lienholders equal to five percent of the outstanding second lien balance, and (3) a litigation safe harbor that "eliminates explicit limits on modifications" and compensates investors.
remedy block" first lienholders seek and limits second
Primary lienholders are more willing to negotiate with a knowledgeable third party than with borrowers or even the second lienholder, she said.
The procedures for third-party mortgagees or lienholders to assert an interest in any sale proceeds, however, remain unclear, he says, with courts in different counties across the state employing different procedures to handle this issue.