equitable lien
Unlike a statutory lien that is created by a statute , an equitable lien is a category of lien imposed by a court to maintain fairness or equity between parties, such as covering the debt that a party fails to pay off. An equitable lien canĀ arise whether or not the creditor has physical possession of the property involved. When a property is subject to an equitable lien, selling it without satisfying the equitable lien attached to it is not possible unless a court removes or releases an equitable lien through a court order, such by paying off all or a portion of the debt a borrower owes.
As seen in First Banc Real Estate v. Johnson , an equitable lien can only be created if there is:
- A duty or obligation owed by one person to another;
- A property interest to which that obligation fastens and which can be identified;
- An intent, express or implied , that the property to which the equitable lien is attached serve as security for the payment of the debt or obligation.
[Updated in February of 2025 by the Wex Definitions Team ]
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