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Equitable lien is a legal remedy to prevent unjust enrichment by pledging the offender’s property. The plaintiff must obtain a court order, prove a tort, and can choose an alternative remedy called a constructive trust. Buyers are subject to the lien if they have prior knowledge, but bona fide buyers are not. The lien can be removed by the court if the defendant pays the plaintiff.
Equitable lien is a legal remedy intended to prevent unjust enrichment. The court pledges property belonging to the offender or to one who has unjustly enriched himself in an attempt to obtain justice. Remedy is based in equity and a plaintiff may seek it in ordinary court or in a court of equity, if available in the applicable jurisdiction. A plaintiff cannot present this type of lien using an administrative process. The plaintiff must obtain a court order allowing the lien in the defendant’s property, and the plaintiff will earn a security interest if the court rules in the plaintiff’s favor.
To persuade a court judge to place a fair lien on the defendant’s property, the plaintiff often has to prove that there was a tort that resulted in damage. For example, if the defendant embezzles money from the plaintiff to buy property, the plaintiff can seek an equitable lien on that property. The plaintiff may also have the choice of an alternative remedy to a lien called a constructive trust. When a court imposes a constructive trust, it gives full title to the property to a plaintiff because it was obtained fraudulently or in bad faith. It is often a better remedy for the plaintiff, especially if the property is going to increase in value.
Buyers of real estate with an equitable lien are subject to it if they have been advised or have prior knowledge of it. If the recipient of a property that has an equitable lien gives no compensation or value for the property, the buyer is also subject to the lien. A bona fide buyer is often not subject to lien under any circumstances. To qualify as a bona fide purchaser, the purchaser must demonstrate that they purchased the property for value and have no knowledge of the facts surrounding the lien and have no reason to know. Plaintiffs who obtain an equitable lien should notify the public by registering them with the local public record keeping agency.
There is a way to remove an equitable lien, but it’s up to the court that enforced the lien in the first place. The lien does not confer rights to own property, but it can be used as a means of collecting payment. The court may allow the defendant to pay the plaintiff money to repair the damage caused and remedy the unjust enrichment. Once paid, the court can release the lien.
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