Also known as: statutory and common law lien · statutory lien · statutory liens · common law lien · common law liens · liens
Written by attorneys · grounded in primary & secondary sources — see below
A lien granted by statute or common law to certain creditors on specific property of the debtor. Such liens commonly arise for contractors and subcontractors improving real property or for repairers of personal property. They attach automatically upon performance of the qualifying work or services and provide a direct claim against the improved asset.
Scott Summers contracts with Skyline Construction to renovate his commercial building. After completion Skyline records a statutory mechanic's lien for unpaid work. When Summers later agrees to sell the building to Sarah Sullivan the title search reveals the unreleased lien. Sullivan refuses to close because the lien renders title unmarketable and Summers cannot obtain a release before the contractual closing date.
Summit Bank obtains a perfected security interest in Santiago Sanchez's crops. Separately Sterling Dynamics later perfects an agricultural lien on the same crops for fertilizer supplied. When Sanchez defaults both creditors claim the harvest proceeds. The bank prevails because its filing occurred first in time under the priority rule for perfected interests.
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Stephen Shaw purchases property subject to an equitable servitude requiring annual environmental audits. After Shaw repeatedly refuses audits the benefited neighbor obtains a court order imposing a statutory lien on the property to secure payment of enforcement costs. The lien is recorded and later satisfied from sale proceeds when Shaw sells the land.
After Sean Steele falls behind on child support payments the state tribunal enters an order directing the county recorder to place a statutory lien on Steele's vacation cabin. The lien is recorded and the support agency later executes on the property to satisfy the arrears when Steele attempts to refinance.
Sophia Singh defaults on a first mortgage held by Summit Bank. To avoid foreclosure Singh voluntarily conveys the residence to the bank in lieu of foreclosure. A junior statutory judgment lien held by Solstice Ventures remains on record. The bank accepts the deed subject to the junior lien and later negotiates a release with the judgment creditor before reselling the property.
Summit Bank obtains a perfected security interest in Santiago Sanchez's crops. Separately Sterling Dynamics later perfects an agricultural lien on the same crops for fertilizer supplied. When Sanchez defaults both creditors claim the harvest proceeds. The second lien has priority because it was the first to attach and become effective among the unperfected interests.
Statutory and common law liens arise automatically by operation of law upon performance of qualifying services rather than by agreement. They attach directly to the improved property and often enjoy special priority rules under state statutes.
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The buyer may refuse to close or rescind the contract if the seller cannot cure the defect by obtaining a release before the closing date. Marketable title requires that all such liens be cleared.
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Many statutory liens attach automatically but some must be recorded or filed within strict time limits to preserve priority. Failure to perfect can subordinate the lien to later interests.
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…with whom The Chief Justice joins, dissenting. I respectfully dissent. The Court’s decision expands the reach of federal tax liens beyond what the statute will bear. Under Michigan law, a tenancy by the entirety is a unique form of concurrent ownership in which neither spouse has an individual interest that can be…