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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 ?
During this webinar Charles will explain just how to can make money with secondary liens and he'll also show some secondary lien opportunities that are available for investors to take advantage of now.
The Third Circuit held that the construction liens filed by Cooper and Samson after the Petition Date had violated the automatic stay in Linear's bankruptcy case.
2) take any action (not adverse to the priority status of the Liens on the Collateral securing the First Lien Obligations, or the rights of any First Lien Agent or the First Lien Lenders to exercise remedies in respect thereof) in order to create, perfect, preserve or protect its Lien on the Collateral;
A A materialmen's lien is a charge upon property to satisfy a debt owed to a contractor or anyone providing labor, professional services, materials or equipment for the improvement of real property.
Mechanics' liens will cease to exist, automatically, if lien claimants don't protect their liens by making the filings required under the mechanics' lien law of the state where the land subject to the lien is situated.
This structure differs from traditional bulk sales of tax liens in which outstanding liens are pooled by local governments and sold to investors.
If a state follows the "first spade rule," all liens have an equal position based on when the project started and then it sometimes becomes a battle of who gets paid.
The broker's lien has become a powerful tool for brokers in that the lien has the same effect on property as a mortgage or the customary mechanics lien.
In a Chapter 7 bankruptcy, liens on real estate may not be avoided even if the dollar amount of the lien exceeds the fair market value (FMV) of the secured property.
Before the auction began, an IRS representative notified the audience of the existence and amount of the bank's liens and said any successful bidder would have to satisfy the liens.