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General Lien

DEFINITION

Lien placed on all real property owned by a debtor/borrower.

EXPLANATION

There are various types of liens that apply to specific property owned by the debtor. A general lien, however applies to any and all properties associated with property owner, while a specific lien only applies to property already indicated by the debtor to use in the event of default.

In the event where a borrower does not pay back his or her loans in a timely manner, the lender will therefore have the authority to take over and seize that individuals personal property/assets. Even if such possessions have no relation to the debt. Real estate is the one form of property that cannot be seized in such a scenario.

Example of General Lien

An individual gets a $400,000 loan. A written promise was signed by both parties with the contract stating the individual must make payments in respect to the loan in full no later then a 5 year period from the date of the agreement. The deadline expires after five years. The bank informs the other party they are still owed $200,000. The client states it does not have the amount required. The bank therefore has little to no choice but to place a lien on the individuals personal assets. These personal possessions include two vehicles owned by the other party with one being valued at $120,000 and the other at $80,000. From here on out, the loan must be paid back with interest within a new deadline if the other party would like to have their seized assets retrieved.

General Lien vs Other types of Liens

Specific Lien- Only applies to one single asset where a lien can be placed

Voluntary Lien- Type of lien agreed to by the borrower when they receive a loan or a credit from a lender or creditor

Involuntary Lien- Occurs through an operation of law. For example a property tax lien is involuntary as a result of the property owner not having to agree to its placement on the property. This is the opposite of a voluntary lien where the borrower agrees to the lien.

Equitable Lien- A lien typically placed on a property in order to achieve fairness. Often times an equitable lien is imposed on a property owner when the owner has gained an unfair advantage to the detriment of another party. The specific purpose of an equitable lien is to prevent the property owner from maintaining the wrongful gain. In addition, the courts will place a lien on the defendants property until the property owner pays back the debt they owe the plaintiff.

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