Non-Possessory Lien

DEFINITION of 'Non-Possessory Lien'

The legal claim against an asset in order to secure payment of the debtor's obligation. In a non-possessory lien the lienor does not hold physical possession of the asset in question, only a legal right. For example, a creditor can place a non-possessory lien against a debtor's piece of real estate in order to recoup his/her loan amount once the property is sold.

BREAKING DOWN 'Non-Possessory Lien'

For example, pawn shops retain possession of an item that a customer uses as collateral for a short-term loan. The pawn store owner therefore retains a possessory lien; if the customer does not repay the loan according to the terms and conditions s/he agreed to, the store owner can take ownership of the item offered as collateral.

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RELATED FAQS
  1. What is the difference between a possessory and a non-possessory lien?

    Gain a basic understanding of a possessory lien and a non-possessory lien, the key differences between the two structures ... Read Answer >>
  2. How can I invest in tax liens?

    Find out about the steps an investor must take to invest in tax liens, along with the potential benefits of doing so. Read Answer >>
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    Understand what a lien is and what types of liens are most common for individuals, and learn which types of liens are good ... Read Answer >>
  4. How do I avoid a tax lien on my property?

    Find out the best way to prevent the government from placing a lien on your property, including the consequences of having ... Read Answer >>
  5. What is the difference between a lien and an encumbrance?

    Understand the legal terms ''lien'' and ''encumbrance,'' and learn the significant distinction between these two essential ... Read Answer >>
  6. Can credit card creditors put a lien in house property?

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