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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 $5,787,500 first lien mortgage to refinance 23 multifamily luxury rental units on Boerum Street in Brooklyn, NY.
The First Lien Bank Lenders believe that they reached an oral agreement in principle with the Company on certain material economic terms with respect to a Restructuring, which would ultimately be effected through a chapter 11 filing.
A $1,850,000 first lien mortgage for the acquisition of an industrial property, located on Elizabeth Ave, in Rahway, NJ.
A $2,500,000 first lien mortgage to refinance a five-unit mixed-use on Woodward Avenue in Ridgewood, NY.
A $4,750,000 first lien mortgage to refinance 16-unit mixed-use on 28th Avenue in Astoria, NY.
A $4,500,000 first lien mortgage to refinance a 9-unit mixed-use on S 4th Street in Brooklyn, NY.
A $3,504,000 first lien mortgage for the acquisition of a 56-unit multifamily on West Hampton Street in Pemperton, NJ.
7 million City of Chicago first lien passenger facility charge (PFC) revenue bonds (O'Hare International Airport 'A+;
A $3,000,000 first lien mortgage to refinance a 12,000 square-foot single-tenant property in Queensbury, NY.
In addition, Fitch expects to assign issue ratings of 'BB-/Recovery Rating (RR)2' to the proposed first lien credit facilities and 'B-/RR5' to the proposed second lien credit facilities to be issued by the Borrower.
An $8,960,000 first lien mortgage to refinance a 60-unit mixed-use on Franklin Avenue in Bronx, NY.

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