What is an equitable lien?

An equitable lien is a legal right secured against a property to ensure payment of a debt or obligation. It is a type of lien that is established by a court of equity rather than by a contract or statute.

How does an equitable lien work?

In order to establish an equitable lien, the party seeking the lien must demonstrate that they have a right to payment that is connected to the property in question. This could include situations where a property owner has failed to pay a contractor for work done on the property or where a borrower has defaulted on a loan secured by the property.

Enforcement of equitable lien

When a court grants an equitable lien, it allows the creditor to take legal action to enforce the lien. This may involve selling the property to satisfy the debt or taking ownership of the property subject to the lien.

Equitable liens play an important role in ensuring that financial obligations are met and that property rights are respected. They provide a legal framework for creditors to secure their interests in cases where a debt is not being repaid.