WHAT IS A LIEN?

What is a mortgage or a deed of trust? They are part of a larger category called “liens.” When a lender, or creditor, has some right to be paid, by foreclosing upon or otherwise taking possession of property, this is called a “lien.” The Court of Appeal put it as follows, “Generally, the term ‘lien’ is defined as a ‘legal right or interest that a creditor has in another’s property, lasting usually until a debt or duty that it secures is satisfied.” (Black’s Law Dict., supra, p. 933..) Frazier Nuts, Inc. v. American AG Credit (2006) 141 Cal. App. 4th 1263, 1277.

Liens come in many forms, and are governed by different legal rules. For example, when you get a loan to buy a car, the car dealer, or the lender, will take a “pink slip.” The pink slip is a certificate of title. By taking it, the lender insures that, if you do not pay, they can repossess the car. This is a lien.

In general, liens in personal property are governed by the Uniform Commercial Code (UCC) and require the filing of a UCC-1 Financing Statement in Sacramento. Taking a lien in real property requires a mortgage, deed of trust or a similar document, which is recoreded in the office of the country recorder, for the county in which the real property is located. Unusual liens are governed by unusual rules. Taking a lien in aircraft, for example, requires the filing of a lien with the Federal Aviation Authority in Oklahoma City, Oklahoma.

Liens are not always created voluntarily, as security for a debt. Liens can also be created involuntarily as part of a court proceeding. If a creditor gets a judgment against someone who owes him or her money, and that judgment is recorded, this creates a judgment lien against all property held by the debtor in that County.

Share