A lien is a legal document that uses a person’s property as collateral for a loan, with specific legal situations determining the type of lien. Common law systems allow for consensual and non-consensual liens, with the latter including tax and mechanic liens. In the US, privileges can be entered into voluntarily or involuntarily, with special and general liens available outside the US.
A lien is a legal document that names a person’s property as collateral against a loan. It is used to secure the payment of debts. If the debt is not paid on time, the property may be foreclosed as payment. Specific legal situations determine the type of lien that will be used. In the United States, the term pledge has a broader definition than is used in other countries.
The legal provision of a lien is available in almost every country operating under a common law system. In a common law system, law is developed from judicial decisions made by judges; underlines the legal precedent on a case-by-case interpretation of the law. This type of bond is basically a contract between two people or organizations. The owner of the property, who offers the property as collateral, is called the landlord. The person awaiting payment of the debt, who accepts the property as collateral, is called the feudal lord.
In the United States, privileges can be entered into voluntarily or involuntarily. A voluntarily created privilege is called a consensual privilege. It is created by a contract agreed between two parties. For example, when a home buyer signs a mortgage, he or she is entering into an agreement with the bank offering the loan.
A non-consensual lien is one imposed on a landlord by a creditor. The law provides for certain situations in which it is permissible to impose a lien on a debtor. Some common situations include a tax lien, where land or other assets may be seized to secure payment of property or income taxes. A mechanical pledge is placed on the property to capture payment for services rendered. This is similar to a lawyer’s lien, which is used to obtain payment for legal services.
Common law outside the United States allows for two basic types of privileges, special privileges and general privileges. Special liens are similar to non-consensual liens in the United States in that there must be a close link between the property used as collateral and the debt that led to the lien. For example, if a debtor owes a mechanic for fixing a vehicle, the mechanic may place a lien on the debtor’s car but not on the debtor’s house. As the name suggests, a general lien can be made against any property owned by the debtor.
Protect your devices with Threat Protection by NordVPN
