What Is a Personal Property Lien?

Felicia Dye
Felicia Dye
Businessman with a briefcase
Businessman with a briefcase

A personal property lien is a legal claim against an item for the value of an unpaid debt. The requirements to get a personal property lien vary from one jurisdiction to another. When the item to which this claim applies is the subject of a financial transaction, such as sale or insurance payments, the lien holder should be paid first. If the property is transferred to another individual and the debt is not settled, the lien is likely to be transferred to the new owner.

There are various situations that can result in a personal property lien. For example, a mechanic may complete repairs on a vehicle only to have the owner claim that she is unable to pay. The mechanic may then take the necessary steps to place a lien against the vehicle. This secures his financial interest in it. Then, if the owner were to get into an accident and was entitled to an insurance settlement, the mechanic would be paid too.

In some jurisdictions, a personal property lien can be obtained anytime there is an unsatisfied debt. In other jurisdictions, however, the debt must be at least a certain amount. Generally, a person must own the item for a lien to be placed against it. A mechanic is not likely to be allowed to place a lien against a rental car that is brought to him for repairs by the renter.

When personal property has a lien against it, any transaction regarding that property should benefit the lien holder first. This includes sale, refinancing, or transfer of title. In some cases, these transactions may occur in a manner that circumvent settlement of the debt. It is important to note that in many jurisdictions liens are transferable. This means that if the property which has a lien against it is sold or granted to another individual without satisfying the debt, the new owner will be subject to the lien.

In some instances, when there is a personal property lien, the item that it applies to may be forcefully sold. This often involves a law enforcement official seizing possession of the property and entering it into an auction. There are usually no obligations that require that a certain percentage of the item's value be recovered. A mobile home valued at $50,000 US Dollars (USD) may be sold for $20,000 USD. After the sale, any debts that have resulted in liens will be paid, usually with interest, and if there is any remaining money, it should be given to the former property owner.

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Discussion Comments


@Perdido – That sounds so messed up! Isn't there some law about providing a notice of intent to lien?

Of course, with all the loopholes and lawyer talk, I'm sure there is a way around it. I hope I never have to go to court for something like this.


Filing a lien sounds like a good idea for a mechanic whose customers refuse to pay. How else would they be able to get their money?


It would have been nice if my friend had received notice of a lien before winding up with several properties. He and his dad owned ten houses, and they had a construction business, which my friend left, and his dad sued him for a lot of money.

My friend wound up winning, so he got possession of the houses. What he didn't know was that each house had a lien on it.

He could never afford to pay all those liens, so he had to give the houses up. It was a very nasty situation.

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      Businessman with a briefcase