When you borrow money, the lender -- whether an individual or a bank --- usually wants to get repaid. Repayment is easier to enforce when the debt is linked to property, which creates a legal arrangement termed a lien. Even if you don't agree to a lien on your property, one can be created by court action or by statute. The latter type is termed a statutory lien.
If you are borrowing money, you may agree to secure the debt with a lien. In exchange for the loan, you give the lender the right to recover the debt from specific property. For example, if you take out a home loan, you usually must give the lender a lien against the house you purchased. If you fail to meet your mortgage payments, the lender can sell your house. This kind of lien is called a consensual lien because you agreed to it as part of the loan.
Read More: How to Contest a Lien
Sometimes a lender is entitled to a lien on your property to secure a debt even if you don't agree to it. Generally, these "nonconsensual" liens fall into two categories. One is judicial liens. A judgment lien is created when someone goes to court and gets a money judgment against you. By filing the judgment with the appropriate government agency, the person creates a lien on real estate you own in that jurisdiction. The other type of nonconsensual lien is called a statutory lien.
Statutory liens do not result from a court case. They arise from statute. That means that the lien is created under certain circumstances because a law says that in those circumstances, a lien may be created. The classic example of a statutory lien is a mechanic's lien, also called builder's lien. If you don't pay a contractor who works on your house, state statutes give him the right to file a mechanic's lien against your house for the amount he is owed.
Other Statutory Liens
Since statutory liens are created by laws, each jurisdiction may have a different list. For example, some states give a mechanic who works on your car a lien on that car for unpaid repair bills. An owner of storage units may be given a lien on the contents of the unit for unpaid rent. A laundry person may be given a statutory lien on clothing he cleans and irons to secure payment for those services. Likewise, the rights of a person holding a statutory lien depend on the terms of the statute. Some include the right to force sale of the property.
Teo Spengler earned a JD from U.C. Berkeley Law School. As an Assistant Attorney General in Juneau, she practiced before the Alaska Supreme Court and the U.S. Supreme Court before opening a plaintiff's personal injury practice in San Francisco. She holds both an MA and an MFA in English/writing and enjoys writing legal blogs and articles. Her work has appeared in numerous online publications including USA Today, Legal Zoom, eHow Business, Livestrong, SF Gate, Go Banking Rates, Arizona Central, Houston Chronicle, Navy Federal Credit Union, Pearson, Quicken.com, TurboTax.com, and numerous attorney websites. Spengler splits her time between the French Basque Country and Northern California.