Lien: Definition, Types and How It Works

Updated 12 Mar 2026Content was accurate at the time of publication

What is a lien?

A lien is a legal right or interest a creditor holds in someone else's property—real or personal—to secure payment of a debt or performance of an obligation. Put simply, a lien gives the creditor an enforceable claim over property until the underlying debt is satisfied. Liens can operate as an encumbrance on land, a possessory right over goods, or an equitable interest recognised by court order or statute.

Understanding what a lien is and how liens work is essential for anyone buying property, taking security over assets, hiring trades, or lending money. This guide covers how liens arise, the main types, how to record and enforce liens (PPSR, land titles, ASIC), and practical steps to challenge or remove a lien.

How a lien arises

A lien can be created in several ways:

By contract: parties agree that a creditor holds an interest in property until payment (for example, a supplier's retention-of-title clause).
By statute: legislation can give a statutory lien to a class of creditors (for example, security-of-payment rules for construction).
By possession: a repairer or bailee who retains goods until payment may have a possessory lien.
By equity: a court may recognise an equitable lien where fairness requires security for a debt.
By judgment: courts can order a lien, charge or judgment debt to be registered against property.

Examples:

A builder completes works and a statutory security gives the builder a lien over the land or contract proceeds.
A mechanic keeps a vehicle until the repair bill is settled — a possessory lien.

Main types of liens

Liens appear in different forms. Below are the core categories with practical examples.

Statutory lien

A statutory lien is created by legislation. Common examples include building-and-construction security regimes that give contractors or subcontractors a lien-like claim over the land or contract funds until payment. These schemes often set fast timelines and notice requirements for making and enforcing claims. See construction liens for related rules and procedures.

Possessory lien

A possessory lien arises when a service provider or bailee retains possession of goods supplied or repaired until payment is made. Typical examples are repairers, mechanics and storage operators. The lien generally ends if the lienholder voluntarily surrenders possession, or where statutory or contract rules restrict retention.

Equitable lien

An equitable lien is imposed by a court where justice requires it — for example, when a person advances funds to improve property and a proprietary right should secure repayment. Equitable liens are not normally registrable on land titles by themselves but can be enforced through court orders.

Contractual lien / retention of title

A contractual lien is created by agreement between parties. A common form is a retention-of-title clause: a supplier retains ownership of goods until the buyer pays. Contractual liens can interact with the personal property register: where goods become part of business assets, the supplier should consider registering a security interest on the PPSR.

Maritime lien

A maritime lien is a specialised in rem claim against a vessel for services, salvage, crew wages or damage. Maritime liens rank highly and can survive changes in vessel ownership until discharged by court or settlement.

Liens and property: registration, priority and competing claims

Understanding where and how to record a lien is central to protecting priority and enforcing rights.

Land titles and caveats

Interests affecting land are usually registered at the applicable land titles office as easements, mortgages or caveats. A caveat is a notice of interest that serves to warn third parties of a claimed interest in land and can prevent registrable dealings while it remains effective. A caveat does not itself determine priority — courts and the registry rules assess competing claims. For practical caveat guidance, see caveat.

PPSR: registering a security interest in goods and personal property

The Personal Property Securities Register (PPSR) records security interests in personal property and goods. Registering (perfecting) a security interest on the PPSR is often essential to preserve priority against other creditors and receivers. Perfection methods include registration, possession (for some types of collateral) or control (for certain financial collateral). A timely PPSR registration generally beats later unregistered claims.

External guidance: the AFSA provides PPSR search tools and registration information at https://www.ppsr.gov.au/ and https://www.afsa.gov.au/

ASIC and company charges

When companies create charges over their assets, sections of the Corporations Act require lodgement of charges with the companies register. Filing with ASIC secures public notice of the charge and affects priority against unsecured creditors or new financiers. See ASIC guidance at https://asic.gov.au/ and further detail in our company charge guide.

Priority rules and examples

Priority typically follows:

Priorities established by statute (some liens or priorities may be non-derogable).
Perfected security interests (first to register on the PPSR generally has priority).
Possessory liens can rank above some registered interests because possession confers practical control, but this varies by circumstance.
Equitable interests may be subordinate to earlier legal interests but superior to later unperfected claims.

Example: A supplier who ships specialised equipment to a buyer but fails to register a PPSR security interest risks losing priority if the buyer grants a subsequent registered charge to a financier.

For interactions between retention-of-title clauses and security registration, see security interest and consider registering on the PPSR. For insolvency interactions and priorities, see insolvency and our charge registration guidance.

Enforcement and remedies

Lienholders have several enforcement options; the availability depends on the lien type, registration status and statutory limits.

Retention of possession: A possessory lienholder may keep goods until payment. Loss of lawful possession or inadequate notice can defeat this remedy.
Sale under power: Contract or statute may allow the lienholder to sell the secured goods after giving required notices. Sale proceeds satisfy the debt and any surplus is returned.
Court order/foreclosure: For non-possessory liens or where sale is contested, a court can order foreclosure, sale or charging of proceeds.
Distress/levy procedures: For certain statutory debts, special recovery mechanisms exist.
Recovery of debt: Lienholders may proceed with debt recovery and enforce judgment via execution against assets.

Key constraints:

Notice and procedural fairness: many regimes require prescribed notices before enforcement.
Consumer protections and regulated industries can limit actions.
Perfection and priority: an unsecured or unperfected creditor may be out-ranked by other secured creditors or liquidators.

See our debt recovery and judgment debt guides for practical steps when enforcing a judgment or lien.

Removing or disputing a lien

If you're a debtor, or a third party affected by a lien, remedies and steps include:

Check registers: search the PPSR, land title records and ASIC to identify registered interests.
Obtain a discharge or withdrawal: where the lien is registered (PPSR or company charge), request a discharge statement or withdrawal from the lienholder.
Provide security for release: a court or lienholder may accept security (e.g., bank guarantee) to release the lien pending dispute resolution.
Court application: apply to court to remove or challenge an equitable or statutory lien on grounds such as invalidity, expiration or abuse of process.
Statutory pathways: some statutory liens are removable by prescribed forms or procedures—check the relevant legislative scheme and registry guidance.
Enforcement notices: ensure the lienholder followed statutory notice and sale procedures; failure can be grounds to resist enforcement or seek damages.

To clear a PPSR registration, ask the secured party to lodge a discharge statement; if they refuse, there are dispute procedures including lodging a verification statement and seeking court orders. For company charges, ASIC's registry holds the lodgement and discharge records; search at https://asic.gov.au/.

Common scenarios and examples

Practical examples illustrate how liens operate:

Builder/subcontractor claim on property: A subcontractor who performs work and is unpaid may assert a statutory security-of-payment claim. The claimant can seek adjudication or lien-style remedies against the property or contract funds under the security regime. See construction liens.

Mechanic with car repair lien: A mechanic repairs a vehicle and retains it until the invoice is paid. If the owner refuses to pay, the mechanic may rely on a possessory lien to hold the vehicle and, after proper notice, sell it to recover costs.

Supplier asserting PPSR interest: A supplier delivers machinery to a business and includes a retention-of-title clause but does not register on the PPSR. If the buyer later grants a bank charge and enters insolvency, the supplier risks losing its priority; a timely PPSR registration could have secured priority. For registration guidance see PPSR.

Company charge disputes: A lender registers a fixed and floating charge over a company's assets with ASIC. Later, a creditor claims an equitable lien over particular assets. Priority depends on the timing and nature of registration and whether the equitable interest was protected. See company charge.

Goods in bailment: A storage operator holding goods for unpaid fees may have a possessory lien but must comply with consumer and storage laws before disposing of goods.

Practical checklist: what to do if you find a lien

If you discover a lien on your property or assets, use this checklist:

Verify the lien:

Search the PPSR for registered security interests.
Search land title records for caveats or mortgages.
Search ASIC for company charges or registrations.

Gather documents:

Invoices, contracts, delivery receipts, correspondence and any notices.

Assess priority and perfection:

Was the lien registered or perfected? Has the holder followed statutory steps?

Communicate:

Contact the claimant to request particulars and a withdrawal or discharge if the claim is settled.

Preserve evidence:

Keep records of offers, payments, and notices.

Consider provisional steps:

Offer security or a bank guarantee to obtain release pending dispute resolution.

Seek professional advice:

Get a solicitor, conveyancer or debt recovery specialist to review the options and statutory timelines.

If you are a creditor:

Ensure you perfect security (PPSR registration where relevant), preserve possession if lawful, and follow notice/sale requirements.

FAQ

Can a lien stop the sale of my property?

A registered caveat or charge often prevents registrable dealings until resolved. A possessory lien can hinder transfer of goods while the lienholder holds them. The practical effect depends on the lien's nature and whether it is registrable.

How long does a lien last?

Duration varies. Some statutory liens expire if not enforced within set times; registered security interests last until discharged; possessory liens end when possession is surrendered or goods are lawfully sold under procedure. Check the specific legislative scheme.

What is the difference between a lien and a mortgage?

A mortgage is a legal interest in land granted as security and is registered on the land title. A lien is a broader category of claim that can be possessory, equitable or statutory and may not require registration on land titles. See mortgage charge for comparison.

How do I search for liens?

Perform a PPSR search (PPSR), land title search for caveats, and an ASIC company search for company charges. Use official registry websites for up-to-date records and consider a professional search via a conveyancer for land title matters.

What are the costs of removing a lien?

Costs include legal fees, registry fees for discharges, potential security to obtain release, and court costs if litigation is required. The exact amounts depend on the process and complexity.

Can I challenge a lien if I believe it's invalid?

Yes: you can seek removal or stay by agreement, provide security, or apply to court to have the lien removed, particularly if the claimant failed to comply with statutory notice or registration requirements.

If I pay under protest, can I recover funds?

Payment may settle the debt and remove the lien; whether you can recover funds paid under protest depends on circumstances, contractual rights, and potential counterclaims.

Key takeaways

A lien is a legal claim that creditors can place on property or goods to secure payment of a debt. Liens can be statutory, possessory, equitable, contractual, or maritime, and their enforcement and removal depend on how they are registered—via the PPSR for personal property, land title registers for real property, or ASIC for company charges. If you discover a lien affecting your assets, search the relevant registers, gather supporting documents, contact the claimant to negotiate discharge, and seek professional legal advice to protect your interests and comply with statutory notice requirements.