The right to retain the lawful possession of the property of another until the owner fulfills a legal duty to the person holding the property, such as the payment of lawful charges for work done on the property. A mortgage is a common lien.
In its widest meaning this term includes every case in which real or personal property is charged with the payment of any debt or duty; every such charge being denominated a lien on the property. In a more limited sense it is defined to be a right of detaining the property of another until some claim be satisfied.
The right of lien generally arises by operation of law, but in some cases it is created by express contract.
There are two kinds of lien; particular and general. When a person claims a right to retain property, in respect of money or labor expended on such particular property, this is a particular lien.
Liens may arise in three ways:
1. By express contract;
2. From implied contract, as from general or particular usage of trade;
3. By legal relation between the parties, which may be created in three ways: 1. When the law casts an obligation on a party to do a particular act and in return for which, to secure him payment, it gives him such lien; common carriers and inn keepers are among this number; 2. When goods are delivered to a tradesman or any other, to expend his labor upon, he is entitled to detain those goods until he is remunerated for the labor which he so expends; 3. When goods have been saved from the perils of the sea, the salvor may detain them until his claim for salvage is satisfied; but in no other case has the finder of goods a lien.
General liens arise in three ways: 1. By the agreement of the parties; 2. By the general usage of trade; 3. By particular usage of trade.
How Liens May Be Acquired.
To create a valid lien, it is essential: 1. That the party to whom or by whom it is acquired should have the absolute property or ownership of the thing or, at least, a right to vest it; 2. That the party claiming the lien should have an actual or constructive, possession, with the assent of the party against whom the claim is made; 3. That the lien should arise upon an agreement, express or implied and not be for a limited or specific purpose inconsistent with the express terms or the clear, intent of the contract; e.g., when goods are deposited to be delivered to a third person or to be transported to another place.
The Debts Or Claims To Which Liens Properly Attach.
1. In general, liens properly attach on liquidated demands and not on those which sound only in damages; though by an express contract they may attach even in such a case as where the goods are to be held as an indemnity against a future contingent claim or damages. 2. The claim for which the lien is asserted, must he due to the party claiming it in his own right and not merely as agent of a third person. It must be a debt or demand due from the very person for whose benefit the party is acting and not from a third person, although the goods may be claimed through him.
How A Lien May Be Lost.
1. It may be waived or lost by any act or agreement between the parties, by which it is surrendered or becomes inaplicable. 2. It may also be lost by voluntarily parting with the possession of the goods. But to this rule there are some exceptions; e.g., when a factor by lawful authority sells the goods of his principal and parts with the possession under the sale he is not, by this act, deemed to lose his lien, but it attaches to the proceeds of the sale in the hands of the vendee.
The Effect Of Liens.
In general, the right of the holder of the lien is confined to the mere right of retainer. But when the creditor has made advances on the goods of a factor, he is generally invested with the right to sell. In some cases where the lien would not confer power to sell, a court of equity would decree it. And courts of admiralty will deCree a sale to satisfy maritime liens.
Judgments rendered in courts of record are generally liens on the real estate of the defendants or parties against whom such judgments are given.
Liens are also divided into legal and equitable. The former are those which may be enforced in a court of law; the latter are valid only in a court of equity. The lien which the vendor of real estate has on the estate sold for the purchase money remaining unpaid, is a familiar example of an equitable lien.
Lien Of Mechanics And Material Men.
By virtue of express statutes in most states, mechanics and material men or persons who furnish materials for the erection of houses or other buildings, are entitled to a lien or preference in the payment of debts out of the houses and buildings so erected and to the land, to a greater or lessor extent, on which they are erected.
The lien generally attaches from the commencement of the work or the furnishing of materials and continues for a limited period of time. In some states, a claim must be filed in the office of the clerk of the court or a suit brought within a limited time. On the sale of the building these liens are to be paid pro rata. In some states no lien is created unless the work done or the goods furnished amount to a certain specified sum, while in others there is no limit to the amount. In general, none but the original contractors can claim under the law; however, sometimes sub-contractors have the same right.