Unperfected Lien – Definition

Cite this article as:"Unperfected Lien – Definition," in The Business Professor, updated September 10, 2019, last accessed October 21, 2020, https://thebusinessprofessor.com/lesson/unperfected-lien-definition/.

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Unperfected Lien Definition

An unperfected lien is a lien that was not filed legally or correctly by a lender. When a lender fails to find a lien with the appropriate legal authority or fails to verify the property, it is an unperfected lien. A perfected lien is accorded priority over an unperfected lien.

A lien is a guarantee that an underlying obligation in a loan will be fulfilled. It is a legal right over a property granted by the law or the owner of the property. Failure of a debtor to repay a loan can lead to the seizure of the asset or property.

An unperfected lien passes a message that other creditors may have existing claim on the property.

A Little More on What is an Unperfected Lien

A perfected lien is the opposite of an unperfected lien. It is a lien that was correctly filled with the appropriate legal authority. Creditors who have perfected liens on properties have legal claims to the properties.

Unperfected liens on the other hand, have shortcomings. There are many factors responsible for unperfected liens, these include;

  • Incorrect information in the lien filed
  • Not filing the lien with a correct legal authority.
  • Negligence in recording finance statement for the property.
  • Failure to detect that there is an existing lien on the property for which the lien of filed.

A creditor that has a perfected lien is given priority over one who has an unperfected lien.

References for “Unperfected Lien

https://www.investopedia.com › Personal Finance › Credit & Debt

www.businessdictionary.com/definition/unperfected-lien.html

https://financial-dictionary.thefreedictionary.com/Unperfected+Lien

Academic research for “Unperfected Lien

From Spokane County to Vermont: The Campaign of the Federal Government Against the Inchoate Lien, Kennedy, F. R. (1964). From Spokane County to Vermont: The Campaign of the Federal Government Against the Inchoate Lien. Iowa L. Rev., 50, 724.

A theory of contractual debt subordination and lien priority, Carlson, D. G. (1985). A theory of contractual debt subordination and lien priority. Vand. L. Rev., 38, 975.

The Effect of the Federal Tax Lien Act of 1966 Upon Security Interests Created Under the Uniform Commercial Code, Coogan, P. F. (1967). The Effect of the Federal Tax Lien Act of 1966 Upon Security Interests Created Under the Uniform Commercial Code. Harv. L. Rev., 81, 1369.

The Choate Lien Doctrine, Burroughs, J. D. (1963). The Choate Lien Doctrine. Duke LJ, 449.

Knowledge as a Factor in Determinig Priorities under the Uniform Commercial Code, Felsenfeld, C. (1967). Knowledge as a Factor in Determinig Priorities under the Uniform Commercial Code. NYUL Rev., 42, 246.

Capital in Hell: Dante’s Lesson on Usury, Koffler, J. S. (1979). Capital in Hell: Dante’s Lesson on Usury. Rutgers L. Rev., 32, 608.

[PDF] From the Bankruptcy Courts: Bankruptcy Trustee’s Strong-Arm Powers Balked by a Constructive Trust, Weintraub, B., & Resnick, A. N. (1990). From the Bankruptcy Courts: Bankruptcy Trustee’s Strong-Arm Powers Balked by a Constructive Trust. Uniform Commercial Code Law Journal, 22, 367.

Creation, Perfection and Enforcement of Security Interests in Intellectual Property Under Revised Article 9 of the Uniform Commercial Code, Axe, K. B. (2002). Creation, Perfection and Enforcement of Security Interests in Intellectual Property Under Revised Article 9 of the Uniform Commercial Code. Banking LJ, 119, 62.

Simultaneous Attachment of Liens on After-Acquired Property, Carlson, D. G. (1984). Simultaneous Attachment of Liens on After-Acquired Property. Cardozo L. Rev., 6, 505.

Is it an Interest in Property or a Lien? The Misapplication of the Federal Bankruptcy Code in North Carolina Bankruptcy Court and the Legal Implication in Construction …, Ross, L. (2011). Is it an Interest in Property or a Lien? The Misapplication of the Federal Bankruptcy Code in North Carolina Bankruptcy Court and the Legal Implication in Construction Practice. The Misapplication of the Federal Bankruptcy Code in North Carolina Bankruptcy Court and the Legal Implication in Construction Practice (February 16, 2011).

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