Term of the Day Wednesday, April 25, 2018
lien
Definition
A legal claim against an asset which is used to secure a loan and which must be paid when the property is sold. Liens can be structured in many different ways. In some cases, the creditor will have legal claim against an asset, but not actually hold it in possession, while in other cases the creditor will actually hold on to the asset until the debt is paid off. The former is a more common arrangement when the asset is productive, since the creditor would prefer that the asset be used to produce a stream of income to pay off debt rather than just held in possession and not used. A claim can hold against an asset until all the obligations to the creditor are cleared (a general lien), or just until the obligations against that particular assets are cleared (a particular lien).
Use lien in a sentence
“ The mechanic was forced to place a lien on the man's car for non-payment after he stiffed him on the bill for the repair work. ”
“ You may be able to get a good deal on a property or car that had been put on lien and was then seized. ”
“ I was shocked to learn that the factory we wanted to sell still had a lien on it from when we hired some contractors to repair it but forgot to pay, and therefore we could not sell until that debt was paid. ”
