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Lien

Legally, a lien can be quite a complex issue so please bear in mind that this is a highly simplified commentary.

Generally, in property terms, this means an informal equitable charge over some of the proceeds of sale. For example, when a seller agrees to pay the agent’s commission and his solicitor’s legal charges from the funds on financial completion. These two professionals are then said to have a lien for their fees. This type of lien does not override any legal charges which must be paid off first. If the sale proceeds are inadequate to repay the outstanding mortgage and the liens, the mortgage always takes priority.

The holder of a lien has no right to require the owner to sell the property unless there is a separate contractual agreement which could be enforced. For example, if the purchase price has only been partially paid, but the buyer has already taken possession, the seller retains a lien over the property for the balance of the sale price. While he cannot force the buyer to sell up without a court order this would prevent the buyer reselling the property without discharging the earlier lien and paying over the outstanding money.

The expression can also cover many other situations not related to a property sale. For example, an architect may have a lien on the plans he produced for a client’s property until the client has paid his professional fees. Or a carrier may hold a lien over goods until his delivery charges are paid.

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