An equitable lien is a type of lien imposed by a court for reasons of fairness rather than created by statute. An equitable lien can arise regardless of whether or not the creditor has physical possession of the property involved.
As seen in First Banc Real Estate v. Johnson, an equitable lien can only be created if there exists:
- 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.
[Last updated in October of 2022 by the Wex Definitions Team]