What Is A Lien (Consensual vs Non-Consensual Lien)?

1. Definition and Overview of Liens

A lien is generally defined as a legal claim or charge on property, usually given to secure the payment of a debt or performance of an obligation.

A lien encumbers property as security for a creditor. A lien is a security device that allows a creditor to have a debt satisfied out of the specific property to which the lien attaches.

The term lien itself originates from the French word loyen (from Latin ligamen, meaning to bind), reflecting that a lien binds the property to the debt.

Crucially, a lien does not transfer title to the property to the creditor; it simply creates a legal interest or encumbrance that follows the property.

The person who owns the property subject to the lien (the debtor, sometimes called the lienee) retains title, but the creditor (lienor or lienholder) holds a security interest in that property.

Liens are fundamental in property and finance law as a means to secure obligations. By tethering the value of property to the performance of a debt, liens provide creditors with assurance of repayment, which in turn facilitates lending and credit in the economy.

Virtually every mortgage loan or secured transaction involves a lien of some kind. Thus, lien agreements are ubiquitous: they underpin home mortgages, vehicle loans (where a lender’s lien on the car secures the auto loan), and business financing (where inventory or receivables may be pledged as collateral).

The law governing liens balances the rights of debtors, creditors, and third parties by establishing clear rules about the creation, priority, and enforcement of these security interests.

2. Legal Nature and Characteristics of Liens

A lien represents a form of security interest in property. It gives the lienholder a qualified right or interest in the property of another, contingent on the existence of a debt or obligation.

The lien exists as an encumbrance on the property, meaning the property serves as security for the underlying obligation.

If the obligation (such as a loan or payment for services) is not fulfilled, the lienholder has the right to satisfy the debt from the property, typically by way of judicial sale or other foreclosure process.

In this sense, a lien creates a right in rem – a right against the property – as opposed to merely a personal claim against the debtor. The property itself stands charged with the debt. Importantly, as noted, a lien confers no title or general ownership to the creditor.¹

It has often been observed that a lien confers no general right of property or title upon the holder; on the contrary, it necessarily supposes the title to be in some other person”. In effect, a lien is often termed a charge on the property rather than a transfer of estate.

This principle is widely accepted in American jurisprudence: the debtor remains the owner of the property, but the property is encumbered and cannot be freely sold or clear of the debt without addressing the lien. Any subsequent purchaser of the property typically takes it subject to the lien, unless the lien is properly released or extinguished.²

Another fundamental characteristic of a lien is its dependency on the underlying obligation. The lien is accessory to the debt or duty it secures.

If the debt is paid or the obligation performed, the lien is extinguished or released, thereby removing the charge on the property. Conversely, if the debt remains unpaid, the lien provides the creditor a remedy against the property.

A lien is essentially a right which the law gives to have a debt satisfied out of a particular thing. It exists only so long as the obligation exists; it cannot survive independently once the debt is discharged.

Thus, the lien’s fate is tied to the fate of the obligation: payment or performance will discharge the lien, whereas default permits enforcement of the lien.

3. Consensual Liens (Lien Agreements) vs Non-Consensual Liens

U.S. law distinguishes between consensual liens and non-consensual liens.

A consensual lien is created by the mutual agreement of the debtor and creditor – in other words, through a lien agreement. These are also known as voluntary liens, since the property owner voluntarily grants the security interest.

Common examples of consensual liens include mortgages on real property and security interests under the Uniform Commercial Code (UCC) for personal property.

In a typical consensual lien scenario, the debtor signs a contract (such as a mortgage agreement or a UCC Article 9 security agreement) giving the creditor rights in specified collateral as security for a loan or obligation.

By contrast, non-consensual liens arise by operation of law without the owner’s voluntary agreement.

These can be further subdivided into statutory liens and common law liens. Statutory liens are created by legislation to secure specific obligations; examples include tax liens (for unpaid taxes), mechanic’s liens (securing payment for contractors or laborers who improve real property), judgment liens (arising from court judgments), and various others.

Such liens attach to a debtor’s property by force of law when certain conditions are met, regardless of the debtor’s consent.

Common law liens are liens recognized by long-standing common law principles rather than by statutes or explicit contracts.

A classic example is the artisan’s lien, which at common law allows a craftsman or repairer to retain possession of an item they have improved or repaired until paid for their services

These traditional common law liens typically require the creditor to have possession of the property (they are possessory liens) and they generally provide only a right to retain (but not to sell) the property until the debt is satisfied, unless a statute expands those rights.

For instance, a jeweler who repairs a watch has, at common law, a lien on the watch for the cost of repair, but if the customer does not pay, the jeweler historically could hold the watch but not sell it absent judicial action or statute.

It is important to note that the existence of statutory liens does not automatically abolish related common law lien rights. Courts have held that unless a statute explicitly displaces the common law, a creditor might still claim a common law lien in situations similar to those covered by statute.

This explains that lien rights can emanate from multiple sources: contract, statute, or common law.

3.1 Creation of a Consensual Lien

As discussed above, a consensual lien arises from an express agreement between the debtor and creditor. Its formation rests entirely on voluntary contractual consent, hence the name.³

The agreement by which a consensual lien is created typically specifies three core elements clearly:

Identification of the collateral property.
Acknowledgment of the underlying obligation or debt secured by the lien.
The debtor’s intent to grant a security interest in the identified property.

Consensual liens on personal property are primarily governed by Article 9 of the Uniform Commercial Code (UCC), which has been enacted in all fifty states in various forms.

Under UCC Article 9, a consensual lien on personal property—often termed a security interest—is created through a security agreement.

For such an agreement to effectively create a valid security interest, three fundamental requirements must be met:

Attachment: The creditor must give value (e.g., extending credit), the debtor must have rights in the collateral property, and the parties must have executed an authenticated security agreement that reasonably identifies the collateral.

Perfection: Although attachment creates an enforceable security interest between debtor and creditor, perfection (commonly through filing a financing statement under UCC Article 9-310) ensures enforceability against third parties.

In real property transactions, consensual liens are usually established through mortgages or deeds of trust.

A mortgage document explicitly evidences the debtor’s agreement to allow the lender (creditor) a security interest in real estate to secure repayment of a loan.

Upon proper execution and recording of the mortgage (or deed of trust), the lien is perfected, thereby giving notice to third parties of the creditor’s interest.

The essence of a consensual lien is the intentional act of the debtor willingly offering property as security. The lien is not implied or imposed by law but emerges directly from the debtor’s informed contractual choice.

The Floating Lien under U.S. Secured Transactions Law and UCC Article 9

3.2 Creation of a Non-Consensual Lien

In contrast, a non-consensual lien arises by operation of law independently from any agreement or explicit consent of the property owner.

Non-consensual liens are imposed automatically due to specific circumstances defined by statutes or common law principles, irrespective of the debtor’s agreement or willingness.

Non-consensual liens fall primarily into two categories: statutory liens and common law liens. Each has its distinct pathway of creation.

3.2.1 Statutory Liens

A statutory lien is expressly established by legislation and arises automatically upon satisfaction of legally defined conditions. Examples include:

Tax Liens: Imposed by federal or state governments automatically when a taxpayer fails to pay taxes. For instance, the Internal Revenue Service (IRS) places a federal tax lien on a taxpayer’s property automatically upon assessment of unpaid taxes and after notice and demand for payment, as codified in 26 U.S.C. 6321.

Mechanic’s Liens: Created automatically when contractors, subcontractors, or material suppliers furnish labor or materials for improving real estate but remain unpaid. Once statutory procedures (such as timely notice and filing requirements) are satisfied, the mechanic’s lien attaches automatically to the property improved, securing payment for their work or materials.

Judgment Liens: Established when a creditor obtains a court judgment against a debtor. The judgment creditor can record this judgment, automatically creating a lien against the debtor’s real property as security for the judgment amount owed.

Statutory liens do not depend on the debtor’s consent. They are imposed strictly under legislative criteria and procedural requirements designed to protect specific creditor groups by giving them automatic rights against debtor property.

3.2.2 Common Law Liens

Common law liens arise from traditional legal doctrines rather than explicit statutory provisions. These liens usually require actual possession of the debtor’s property by the creditor, and are grounded in long-standing equitable principles, particularly preventing unjust enrichment.

Classic examples include:

Artisan’s Lien: Arises automatically when someone (an artisan) repairs or improves personal property at the owner’s request. The artisan can retain possession of the item until payment is made for the service rendered.

Innkeeper’s and Carrier’s Liens: Developed historically, these liens automatically provide hotel operators or freight carriers a right to retain a guest’s or shipper’s goods until charges are paid.

Common law liens generally rely heavily on actual possession of the property by the creditor. Without possession, the lien typically does not arise or may be extinguished.

The right arises automatically as a matter of common law doctrine to secure fair compensation for services provided.

Common law also traditionally recognized only certain kinds of liens absent statute or agreement. As mentioned earlier, common law liens were typically possessory; they arose by operation of law from dealings between parties (like the artisan’s lien, innkeeper’s lien, or carrier’s lien for freight charges) and allowed the creditor to retain the debtor’s goods until payment.⁴

These do not stem from any contract clause, but from common law doctrine meant to encourage payment for services rendered.

Over time, many of these common law lien principles have been codified or modified by statute.

Yet, courts still occasionally invoke common law or equitable principles to recognize liens where appropriate – for example, acknowledging a constructive lien or interest in property in order to do justice between parties in the absence of formalities.

3.2.3 Equitable Liens

An equitable lien is not created by an express contract granting a lien, but rather may be declared by a court in order to prevent injustice.

For example, if a debtor agreed in a contract to give a mortgage on certain property as security, but never executed the mortgage, a court of equity might treat the situation as if the mortgage were given and recognize an equitable lien in favor of the would-be mortgagee.

Equitable liens often arise in situations involving unjust enrichment or clear intent to create a security right that was ineffectively executed.⁵

One common equitable lien historically recognized is the vendor’s lien — a lien implied in favor of a seller of land for the unpaid portion of the purchase price of the property.

Such a lien arises automatically in equity when land is sold but not fully paid for, even if the deed of sale does not expressly retain any security interest.

The vendor’s lien ensures that the seller can claim the property as security for the debt of the price, balancing the purchaser’s equitable interest in the acquired land.

It should be noted that equitable and common-law liens, while important to the historical development of security rights, operate somewhat differently from contractual lien agreements.

Equitable liens depend on judicial recognition and typically require a showing of clear intent or equities that justify treating property as security for a claim. They do not rely on the consent of the owner at the time of creation (indeed, they may arise contrary to the owner’s intent, as in the case of preventing unjust enrichment). As such, they are a supplement to, not a substitute for, express lien agreements.

The overarching legal framework in the U.S. today, especially in commercial contexts, is to encourage express security agreements and statutory liens, thereby reducing the need to rely on implied or equitable liens except in unusual circumstances.

3.3 Consensual vs Non-Consensual Liens

Comparison	Consensual Liens	Non-Consensual Liens
Origin	Created voluntarily by agreement between debtor and creditor.	Created automatically by operation of law.
Basis of Creation	Contractual agreement (e.g., security agreement, mortgage, deed of trust).	Statute or common law doctrine (e.g., tax lien, mechanic’s lien, judgment lien, artisan’s lien).
Debtor’s Consent	Explicit consent required from debtor.	No debtor consent required.
Common Examples	Mortgages, UCC security interests, deeds of trust.	Tax liens, mechanic’s liens, judgment liens, artisan’s liens, carrier’s liens.
Attachment Requirements	Agreement, value given by creditor, debtor’s rights in collateral.	Satisfaction of statutory conditions or possession under common law.
Perfection Requirements	Usually requires filing a financing statement or recording a mortgage.	Often perfected automatically upon creation, or by statutory filing procedures.
Possession Requirement	Generally not required (with exceptions, e.g., pledges).	Often required for common law liens (e.g., artisan’s lien), but typically not required for statutory liens.
Legal Framework	Primarily governed by contract law and statutes (e.g., UCC Article 9).	Governed entirely by statutory provisions or common law precedents.
Purpose and Policy Rationale	Facilitate secured lending, promote voluntary creditor protection.	Protect creditors by law, secure taxes, or prevent unjust enrichment.

4. Priority and Perfection of Liens

When multiple liens exist on the same property, the concept of priority determines the order in which competing liens will be satisfied.

As a general rule, liens follow the maxim “first in time, first in right,” meaning that the lien that was attached or perfected first has priority over later-arising liens on the same property.⁶

For instance, if a debtor grants a mortgage to Lender A and later a second mortgage to Lender B on the same parcel, and the debtor defaults, Lender A’s lien (being first in time) will typically be paid in full before Lender B receives anything from the proceeds of a foreclosure sale.

Priority can become complex when different types of liens intersect – for example, a government tax lien or a mechanic’s lien might, by statute, be given priority even over earlier-recorded liens in certain circumstances. But absent special rules, temporal priority generally prevails.

Conversely, if a lien arising from a lien agreement is not perfected, a subsequent bona fide purchaser or junior creditor may take an interest in the property that leapfrogs the unperfected lien, due to lack of notice.

Recording and filing statutes are designed to prevent such outcomes by giving constructive notice of the lien to all parties.

A perfected lien carries significant protections: it is normally effective even against third-party purchasers of the property and will prevail against the debtor’s trustee in bankruptcy

An unperfected lien, by contrast, may be vulnerable: it might be subordinate to claims of other creditors who do perfect their interests, and in bankruptcy an unperfected security interest can often be avoided by the bankruptcy trustee (under the strong-arm powers in the Bankruptcy Code) to treat the lienholder as an unsecured creditor.

Thus, while the lien creates the lien between debtor and creditor, the act of perfection solidifies its enforceability and priority in relation to other claimants.

Chattel Mortgage Agreements Under the Bills of Sale Act 1878 and the Amendment Act 1882

5. Enforcement of Liens

By its nature, a lien implies a remedy against the encumbered property. If the debtor does not fulfill the obligation secured by the lien, the lienholder has the right to enforce the lien to recover the debt from the property.

The method of enforcement depends on the type of lien and the governing law. In the context of a lien agreement (consensual lien), enforcement typically occurs through a foreclosure or similar process authorized by law.

For real property liens, foreclosure can be judicial – involving a lawsuit culminating in a court-ordered sale of the property – or non-judicial under a power of sale clause (available in many states for deeds of trust or mortgages, allowing a sale by the trustee or lender outside of court).

Upon foreclosure sale, the proceeds are distributed to satisfy the debt owed to the foreclosing lienholder, and any junior liens are normally extinguished (though junior lienholders are paid in order of priority if funds remain after the senior lien is paid).

Under Article 9 of the UCC, a secured party in a personal property transaction can enforce its security interest upon the debtor’s default by repossessing the collateral (peacefully without breach of the peace, or via replevin action through the courts) and then selling or disposing of the collateral in a commercially reasonable manner.

The proceeds of such disposition are applied to the debt, and any surplus is returned to the debtor, while any deficiency (if the sale yields less than the debt amount) remains a personal obligation of the debtor (unless prohibited by an anti-deficiency rule).

The doctrinal rationale for these enforcement rights is that the lien gives the creditor a property-based avenue of recovery, supplementing or replacing the personal remedy against the debtor.

The creditor’s right is to have the debt paid from the value of the specific property, which is why liens are sometimes described as encumbrances that “follow” the property.

Even if the property is transferred to a new owner, a valid lien (if not paid off) will generally continue to encumber the asset, allowing the lienholder to enforce against the property in the new owner’s hands. This characteristic supports the in rem nature of a lien: it adheres to the property itself.

Legal safeguards often exist to protect against wrongful or excessive enforcement. Debtors may have rights of redemption (e.g., the right to redeem property by paying off the debt before a foreclosure sale is finalized) or other procedural protections.

Certain property interests, like homesteads, may have limited protection from forced sale except for specific liens.

Additionally, if a lien is wrongfully asserted or the process is abused, courts can provide remedies (for instance, invalidating fraudulent liens or enjoining improper foreclosure).

These safeguards, however, are part of the procedural context. The doctrinal essence remains that a lien agreement entitles the creditor to proceed against the collateral upon default, following the processes set out in law, to ultimately convert the property into funds to pay the debt.