What is a lien?

A lien gives the creditor an enforceable claim over property until the underlying debt is satisfied. It can be an encumbrance on land, a possessory right over goods, or an equitable interest recognised by a court or a statute. Liens matter to anyone buying property, taking security over assets, hiring trades or lending money.

Liens arise in five main ways. By contract, the parties agree that the creditor holds an interest in property until payment, as with a supplier's retention-of-title clause. By statute, legislation gives a class of creditors a lien or charge over property or funds. By possession, a repairer or bailee keeps goods until paid; by equity, a court recognises a lien because fairness requires it; and by judgment, a court orders a lien or charge to be registered against property.

A statutory lien is created by legislation. Australia has no builder's lien over land: security of payment legislation gives contractors adjudication and payment rights, and a Queensland subcontractor's charge attaches to money payable under the contract, not to the land. A contractor can caveat a title only where the contract itself charges the land. A possessory lien arises when a repairer, mechanic or storage operator keeps goods until the bill is paid; it generally ends if the lienholder voluntarily gives up possession.

An equitable lien is imposed by a court where justice requires it, such as when someone pays to improve a property and fairness demands security for repayment. A contractual lien is created by agreement, most often a retention-of-title clause under which the supplier keeps ownership of goods until the buyer pays. A maritime lien is a specialised claim against a vessel for services, salvage, crew wages or damage; it ranks highly and can survive a change of ownership.

Where a lien is recorded determines how well it is protected. Interests in land are registered at the land titles office as mortgages or caveats. A caveat is a notice of a claimed interest that can block registrable dealings while it stands, but it does not itself decide priority.

Security interests in goods and other personal property are registered on the Personal Property Securities Register (PPSR). Registering, or otherwise perfecting, an interest is usually essential to hold priority against other creditors, such as a financier with a registered floating charge, and a timely registration generally beats later unregistered claims. Priority broadly runs from statutory priorities to perfected security interests, where first to register generally wins. Possessory liens can rank above some registered interests because possession gives practical control, and equitable interests usually sit behind earlier legal interests but ahead of later unperfected claims.

How a lienholder can enforce depends on the type of lien, its registration and any statutory limits. A possessory lienholder can keep the goods until paid, and a contract or statute may let it sell them after giving the required notices, applying the proceeds to the debt and returning any surplus. For other liens, a court can order a sale or a charge over the proceeds.

If you find a lien over your property, the usual steps are to search the PPSR and land title records, gather invoices, contracts and notices, and ask the secured party for a discharge once the claim is settled. A court can remove an invalid or expired lien, and a lienholder that skipped the required notice or sale steps may be unable to enforce. Offering other security in place of the goods can get them released while the dispute is sorted out.