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What is a Statutory Lien?

Mary McMahon
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Updated: May 17, 2024
Views: 14,108
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A statutory lien is a claim on property which is provided by a law or ordinance. It is not necessary to obtain a court order to get a statutory lien, nor is it necessary to get consent from the owner of the property to take out a lien against it. Like other liens, statutory liens are designed to allow creditors to collect a debt. The law surrounding such liens varies, depending on the region. People who have been subjected to a statutory lien should consult a lawyer to discuss their options.

These types of liens are created by the very nature of certain types of transactions. For example, people like construction workers have what are known as "mechanics' liens," which allow them to hold property as a claim against payment. Likewise, tax agencies can take out a lien against property owned by a delinquent taxpayer. These liens are defined by law and are automatic in nature.

Once a statutory lien comes into effect, the only way to lift the lien is to resolve the debt which led a creditor to enforce the lien in the first place. This may be done by paying the debt in full, by working out a payment plan and having the creditor lift the lien, or by having part of the debt forgiven or canceled. Lawyers can often help with negotiations to repay a debt so that a lien will be lifted.

Getting the lien lifted is important. As long as a piece of property is covered by a statutory lien, it cannot be sold or transferred because the title is not clear. The creditor may also be able to take additional actions; tax agencies, for example, can seize assets for nonpayment and sell them at auction in order to satisfy a tax debt. Having a lien also reflects poorly on someone's credit and can make it difficult to obtain loans.

This type of involuntary lien will not be activated unless a triggering event, such as nonpayment for services rendered, occurs. The creditor is usually willing to negotiate first, only enforcing the liens which they are legally entitled to when it becomes apparent that the debtor is not going to pay. People who think that they will have difficulty paying for services, property taxes, or other expenses should attempt to work out a payment agreement in advance, rather than simply not paying and waiting for the creditor to take action.

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Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a WiseGeek researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

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Discussion Comments
By karem10 — On May 03, 2012

How can I obtain information on the lien search period on a Home Equity Line of Credit? How far back do states require the title company to search for any type of lien on a property. I need information for all 50 states.

Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

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