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What is a Statutory Lien (Bankruptcy) and How Does It Work?
Definition & Meaning
A statutory lien is a legal claim against a property that arises automatically under specific laws. This type of lien is created by statute, meaning it does not require a contract or agreement between parties. Statutory liens can occur under certain conditions, such as when a property owner fails to pay taxes or rent. Unlike security interests or judicial liens, statutory liens are established solely by law and do not depend on a court order.
Table of content
Legal Use & context
Statutory liens are commonly used in various legal contexts, particularly in bankruptcy cases, tax law, and landlord-tenant disputes. They can affect the priority of claims against a debtor's assets during bankruptcy proceedings. Users may encounter statutory liens when dealing with property taxes, unpaid debts, or eviction processes. Legal forms related to statutory liens can help users navigate these situations effectively.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
1. A property owner fails to pay their local property taxes. The government places a statutory lien on the property, allowing them to recover the owed amount through a sale of the property if necessary.
2. A landlord may place a statutory lien on a tenant's personal property for unpaid rent, enabling them to claim the property until the debt is settled. (hypothetical example)
Relevant laws & statutes
Statutory liens are governed by various federal and state laws. One significant federal statute is the Bankruptcy Code, specifically 11 U.S.C. § 101, which defines statutory liens and their implications in bankruptcy cases. Additionally, state laws may outline specific procedures and requirements for enforcing statutory liens.
State-by-state differences
State
Statutory Lien Type
Key Differences
California
Tax lien
Automatic lien for unpaid property taxes.
New York
Mechanic's lien
Allows contractors to place liens for unpaid work.
Texas
Landlord lien
Landlords can claim tenants' property for unpaid rent.
This is not a complete list. State laws vary, and users should consult local rules for specific guidance.
Comparison with related terms
Term
Definition
Key Differences
Judicial lien
A lien resulting from a court judgment.
Requires a court order, unlike statutory liens.
Security interest
A legal claim on collateral to secure a debt.
Established through a contract, not by statute.
Common misunderstandings
What to do if this term applies to you
If you find yourself facing a statutory lien, it's important to understand your rights and options. Consider the following steps:
Review the details of the lien to understand its basis and validity.
Consult with a legal professional if you need assistance in disputing the lien or negotiating a resolution.
Explore US Legal Forms for templates that can help you manage the situation effectively.
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