VocabuLaw

General Lien

What is it and what does it mean?

Description of the legal term General Lien:

A general lien is a legal right that allows an individual or entity to retain possession of property belonging to another person until a debt owed by the property owner is settled. This right is not limited to the specific amount or transaction but applies to any balance due across the professional relationship between the lien holder and the property owner. What distinguishes a general lien from a specific lien is the fact that a specific lien pertains to one transaction or debt, for example, a mechanic’s lien on a car for the repair work done to that car. In contrast, a general lien covers the balance of all amounts owed to the lien holder.

The right to a general lien is typically found among professionals who offer their services for the improvement, maintenance, or retention of property. It is an important tool that offers security to the lien holder since it serves as leverage to ensure payment for services rendered. However, the lien does not provide the right of sale, merely retention until payment is received. If the property owner fails to pay, the lien holder may bring a legal action to enforce the lien or sell the property to satisfy the debt, but only after obtaining a court order or going through a statutory process.

Furthermore, the right to a general lien can either arise by common law or statute, or by the express or implied terms of a contract. In common law, certain professions, such as solicitors, bankers, and stockbrokers, are recognized to have an inherent right to a general lien, often due to the nature of their relationship with clients and the handling of their clients’ property or funds. For other professionals or businesses, a contractual agreement is the primary route to secure a general lien.

This legal principle is crucial as it extensively serves businesses and professionals by offering them a form of protection for their services rendered. It is especially important in situations where the professional frequently deals with the same client for different transactions, and the power to retain property ensures that payment is more secure for all accumulated debts.

Legal context in which the term General Lien may be used:

For instance, in the instance of solicitors, the principle of a lien becomes particularly relevant. Suppose a solicitor has been dealing with various legal matters for a client over several years, ranging from property transactions to business contracts and personal legal advice. The client has however fallen into arrears with payments, leaving a considerable sum unpaid across these various matters. The solicitor may exercise a general lien over any papers, documents or other property of the client which is within the solicitor‘s possession as a way of compelling payment of the outstanding fees.

Another example is found within the realm of banking. If a client has borrowed multiple sums of money from the bank and secured various assets as collateral, the bank can invoke a general lien on these assets if the client defaults on repayment. Therefore, if the client fails to settle their debts, the bank has the right to retain all assets pertaining to the different transactions, as opposed to just one asset related to a single transaction, which would have been the case with a specific lien.

Understanding and exercising a general lien can be pivotal in ensuring that businesses and professionals are protected against losses through debt recovery mechanisms. This legal concept emphasizes the importance of contractual and professional relationships, and fosters a sense of trust that services provided will be compensated as agreed upon.

This website is for informational purposes only and may contain inaccuracies. It should not be used as a substitute for professional legal advice.