Also known as: statutory liens
Written by attorneys — see sources below.
A lien arising solely by force of a statute on specified property when a designated obligation remains unpaid. The lien is distinct from both consensual security interests and judicial liens created through court proceedings. Its scope, duration, perfection, and priority are controlled by the terms of the creating statute rather than by agreement or judicial process.
Simone Sanders conveyed a parcel by warranty deed to Sterling Manufacturing before she held title. Months later the county docketed tax liens against her for unpaid assessments. When she later acquired the parcel, the after-acquired title passed immediately to Sterling under estoppel by deed, so the statutory tax liens never attached to the property.
Sebastian Santos operated a dairy and granted a statutory agricultural lien to Silverline Industries for unpaid feed. When Santos filed bankruptcy, the trustee examined whether the lien could be avoided. Because the lien arose solely by force of statute and was not a security interest or judicial lien, the creation of the lien itself was protected from preference attack under the statutory-lien exception.
In 1980 V.N. Deprizio Construction Co. was awarded contracts to do $13.4 million of work on the extension of Chicago's subway system to O'Hare Airport. By 1982 the company was in financial trouble. Because Mayor Byrne wanted the line open before the primary election for that office in February 1983, the City made the firm extraordinary loans of $2.5 million; the firm in turn donated $3,000 to the Mayor's campaign fund. In April 1983 Deprizio Co. filed a petition under the Bankruptcy Code of 1978. Richard N. Deprizio served as the firm's president. His brothers Robert and Edward also functioned as insiders of the firm. Deprizio Co. had borrowed money from many sources other than the City of Chicago, including Ingersoll Rand Financial Corp., CIT Group/Equipment Financing, Inc., and Melrose Park Bank & Trust. Richard Deprizio co-signed the note to the Bank. Richard and his brothers, Robert and Edward, all insiders of the firm, also guaranteed its debts to other lenders. Deprizio Co. was party to collective bargaining agreements calling for payments to pension and welfare plans. When it fell behind in making the required payments, the firm executed notes in favor of the plans, secured by junior interests in equipment in which Ingersoll and CIT held senior interests. Richard Deprizio co-signed the notes to several plans. The Central States Pension and Welfare Funds received only notes and security interests, from Deprizio Co.; no insider guaranteed these notes. Then there were tax obligations. Employers must remit to the government taxes withheld from wages. The Trustee believes that Deprizio Co. fell behind in making these payments but made substantial payments of delinquent withholding taxes in the year before bankruptcy. The United States, on the other hand, believes that Deprizio Co. did not remit any overdue taxes during the year before it filed its petition in bankruptcy. As the investigation continued and Deprizio's indictment was imminent, word circulated that he might "sing". So in January 1986 Deprizio was lured to a vacant parking lot, where an assassin's gun and the obligations of a lifetime were discharged together. The Trustee filed adversary proceedings against the lenders, the pension and welfare funds, and the United States — none of them insiders — seeking to recover payments made more than 90 days but within the year before the filing. Without deciding whether any of the payments was preferential within the meaning of § 547 or worked to the benefit of any insider, the bankruptcy judge denied the Trustee's request. On an interlocutory appeal to the district court, Judge Plunkett reversed. The district court remanded the case so that the bankruptcy court could determine whether the payments identified by the Trustee occurred, whether an insider received a benefit from any particular payment, and whether any of them was protected by § 547(c). Judge Plunkett certified the question under 28 U.S.C. § 1292(b), and we granted leave to appeal.
View caseA statutory lien arises automatically by operation of statute when a specified obligation is unpaid. A judicial lien requires a court proceeding and docketing or recording of the judgment. The bankruptcy code expressly excludes judicial liens from the definition of statutory lien.
Yes. Section 545 permits the trustee to avoid certain statutory liens, including those for rent and those that are unperfected against a hypothetical bona fide purchaser at the commencement of the case. Liens that survive section 545 analysis remain enforceable.
Article 9 generally excludes statutory liens from its scope except for agricultural liens. Non-agricultural statutory liens are governed by the specific statute that creates them and by non-UCC priority rules.
A judgment lien, which is a statutory lien, attaches to real property the debtor acquires after docketing, provided the property is located in the county where the judgment is recorded. Estoppel by deed may prevent attachment if title passes directly to a prior grantee.
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