Also known as: possessory lien
Written by attorneys · grounded in primary & secondary sources — see below
An interest in goods, other than a security interest or agricultural lien, that secures payment or performance of an obligation for services or materials furnished with respect to goods by a person in the ordinary course of the person's business. The interest must be created by statute or rule of law in favor of that person and its effectiveness must depend on the person's continued possession of the goods. A possessory lien on goods has priority over a security interest in the goods unless the statute creating the lien expressly provides otherwise.
Farmer Nora delivered her tractor to Leo for engine repairs after defaulting on a loan from Prairie Bank. Leo completed the work in the ordinary course of his business and kept possession when Nora failed to pay. Prairie Bank, holding a prior perfected security interest in the tractor, demanded its release. Leo's possessory lien prevails, allowing him to retain the tractor until paid.
Maine Sports Complex delivered fabric domes to Yeadon for repairs under a state statute granting a lien effective only while possession continued. Yeadon performed the work in its ordinary business and retained the domes after nonpayment. A prior secured party claimed the domes under an earlier interest. Yeadon's possessory lien takes priority because the creating statute did not expressly subordinate it.
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A possessory lien has priority over a security interest unless the statute creating the lien expressly provides otherwise. The timing of the security interest's perfection does not control. The rule supplies super-priority to qualifying liens that arise by statute and depend on possession.
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The lien must secure payment for services or materials furnished with respect to goods in the ordinary course of the lienholder's business. It must be created by statute or rule of law. Its effectiveness must depend on the lienholder's possession of the goods.
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Silence means the statute does not expressly provide otherwise. The default rule of UCC § 9-333(b) therefore grants the possessory lien priority over a security interest. The lienholder may retain the goods until paid.
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Knowledge of a prior security interest does not defeat priority. The rule contains no knowledge or notice requirement. The lien still prevails when the statute is silent on subordination.
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