Possessory Lien – Definition

Cite this article as:"Possessory Lien – Definition," in The Business Professor, updated September 19, 2019, last accessed September 26, 2020, https://thebusinessprofessor.com/lesson/possessory-lien-definition/.


Possessory Lien Definition

A possessory lien offers a creditor the authority to possess a property under the lien until the borrower has paid his or her debt or loan. A lien refers to the claim that a person possesses over somebody else’s property  that is kept as a security for paying a debt. The person or party granting the lien becomes the owner or possessor of the property until the debt payment is made.

A Little More on What is a Possessory Lien

For instance, if a person has purchased something on credit, he or she won’t be able to possess it until the seller or creditor has been paid in full. As compared to the U.S. liens where the lienee stays in the possession of the property prior to paying the debt just like a home mortgage, possessory lien tends to be different.

A lien doesn’t offer ownership over the security, instead it is a kind of encumbrance. Liens are associated with the property, instead of a person.

How Possessory Liens are Applied to Commerce and Trade

The term ‘possessory lien’ goes well with the commerce area. For instance, earlier, an innkeeper received a lien on the guests’ property for the expenses of their sleeping at the inn, having full-fledged breakfast, and utilizing other facilities over there. The concept of the possessory seemed to be right provided the innkeepers were offered a huge array of duties to perform. There are assumptions that previous courts offered the possessory lien structure. It helped in reducing the costs in the commercial sector, particularly for the service providers who were unable to file a suit for a reasonable value of the services.

One can ascertain the value or worth of a possessory lien by measuring the value of goods that are held in possession. These liens don’t always offer the creditor the authority to sell the property for reimbursing their expenses or debts in case the borrower fails to repay.

Besides innkeepers, there are other kinds of commerce and trade that use possessory liens. They include liens of vendors, liens of garagemen, and pledges of chattels. For instance, in case the car owner doesn’t incur towing, repair and maintenance, and storage costs of its vehicle, the garageman has the right to possess the vehicle until such costs are paid. If possible, the garage can also sell the vehicle for getting its payments back.

It would be important to know that agricultural liens or security interests are not covered under possessory liens.

References for “Possessory Lien






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