Lien

Q: Is a lien the same as a charge or a mortgage?

Not quite. A lien is generally a right to retain possession until a debt is paid; it does not by itself give a right to sell. A charge or mortgage is a registered security interest over an asset that usually does carry a power of sale on default. A lien is narrower and often possession-based.

2 min read

PossessionRight to hold, not sell

Until paidReleased on settlement

In plain terms

A lien is the right to hold on to something that belongs to someone else until they pay what they owe. The classic example is a garage that keeps your van until you settle the repair bill — that is a lien in action. The party holding the asset does not own it, but can lawfully refuse to release it until the related debt is cleared.

Liens come in two broad types. A possessory lien depends on physically holding the goods; let go of them and the right is usually lost. An equitable or registered lien can exist without possession but must generally be created by contract or statute. The defining feature is that the right is tied to a specific item and a specific debt connected to it.

Why it matters to your business

Liens cut both ways. Your business may benefit from one — a repairer, warehouse or solicitor holding a client's property as security for unpaid fees. Equally, you may find your own goods or money caught by someone else's lien if a bill is in dispute. Understanding the right helps you protect leverage you hold and avoid surprises over assets you assume are freely yours.

It also matters when you borrow. A lien is a form of security, and a thicket of existing liens over your stock, equipment or cash can complicate a lender's assessment, because they sit ahead of any new lending in the queue for recovery. When you take finance, it is worth knowing what claims already attach to your assets. Credicorp's short-term facilities are lent to the company against its overall standing, but clarity on existing security always helps a clean application.

An example

A logistics firm stores a client's goods in its warehouse under a contract that grants a lien for unpaid storage charges. The client falls £6,000 behind and demands its pallets back. The logistics firm can lawfully refuse to release the goods until the arrears are paid — the lien gives it real bargaining power.

The same firm, however, sends a fleet vehicle for repair and cannot collect it until the garage's invoice is settled, because the garage holds a possessory lien over the van. Knowing the rules on both sides shapes how the business negotiates.

Frequently asked questions

Is a lien the same as a charge or a mortgage?

Not quite. A lien is generally a right to retain possession until a debt is paid; it does not by itself give a right to sell. A charge or mortgage is a registered security interest over an asset that usually does carry a power of sale on default. A lien is narrower and often possession-based.

Can a supplier put a lien on my goods?

Yes, if the contract or the law gives them one — for example a repairer, warehouse keeper or carrier holding your property for unpaid charges connected to that property. Always read terms of business, as many include a contractual lien clause.

Does a lien affect my ability to borrow?

It can. Existing liens over your assets sit ahead of new lenders for recovery, so they affect how a lender values your security. Being clear about what claims already attach to your stock, equipment or cash makes for a cleaner finance application.