A general lien is against all the property owned by a debtor. This is different from a specific lien, which is against a specific piece of property. A typical car loan or home mortgage is an example of a specific lien. In a specific lien, the specific piece of property alone satisfies the debt; the lien does not attach to other property owned by the debtor. In a general lien, money owed might come from the sale of the car, house and other property owned by the debtor.
A lien gives a creditor the right to recoup a debt through the proceeds from a sale of property. A lien is a claim against property, often used to secure a loan. The lien represents the lien holder’s interest in the property, not ownership. The lien gives the lien holder the legal right to compel payment, according to state laws. The general lien affects all personal and real property owned by the debtor.
General vs. Specific Liens
If sued, the judgment might be against all of a person’s assets, until the judgment is paid, making it a general lien. Yet, if the debt is for a car loan, the repossession of the car alone is typically sufficient to satisfy the loan, even if the lender is not able to resell the car for enough to satisfy the initial debt, thus making it a specific lien.
To force the sale of the debtor’s property to repay the debt, the lien holder typically needs to introduce legal action. A lien does not necessarily restrict the debtor from selling the property, yet it can determine what happens to the funds after the sale. Unlike liens against real property, which attach to the property when filed, liens against personal property attach to the property after seizing the property.
Voluntary and Involuntary
There are different types of specific liens, which include voluntary and involuntary. A voluntary lien is one the borrower establishes, such as a car loan or home loan. An involuntary lien is not something the debtor chooses. Laws such as tax laws or court rulings create involuntary liens. Unlike the specific lien, which can be created either voluntarily or involuntarily, general liens are just created involuntarily.
Equitable and Statutory
A lien might be a statutory lien or an equitable lien. Statue creates a statutory lien, such as a property tax or income tax lien. An equitable lien has its roots in common loan. Court action creates an equitable lien, theoretically created out of fairness.
- "Modern Real Estate Practice"; Fillmore Galaty, et al.; 2006
- Internal Revenue Service. "Understanding a Federal Tax Lien." Accessed Sep. 18, 2020.
- Experian. "Tax Liens Are No Longer a Part of Credit Reports." Accessed Sept. 18, 2020.
- Experian. "What Affects Your Credit Scores?" Accessed Sep. 18, 2020.
- Federal Trade Commission. "Fair Credit Reporting Act 15 U.S.C § 1681," Page 22. Accessed Sep. 18, 2020.
Ann Johnson has been a freelance writer since 1995. She previously served as the editor of a community magazine in Southern California and was also an active real-estate agent, specializing in commercial and residential properties. She has a Bachelor of Arts in communications from California State University, Fullerton.