What is a General Lien?

General liens are claims against the property of a debtor. Unlike some other types of liens, a general lien is not limited to one specific asset or property owned by the debtor. Instead, the lien provides the creditor with the right to seize any and all assets of the debtor in order to settle the outstanding amount due.

When a general lien is imposed, the creditor is granted the right to claim ownership of both the real and the personal property of the debtor in order to settle the debt. This means that the creditor may choose to seize assets like the balances of any bank accounts the debtor currently has, any type of real estate, and even stocks and bonds that are owned by the debtor. Even property such as motor vehicles, furnishings, and jewelry are subject to the settling of a general lien. Any asset that can be converted into cash for the purpose of paying off the debt is covered under the terms of the lien.

Depending on the laws that apply in a given jurisdiction, there may be some limitations on what type of assets can be seized in order to satisfy a general lien. In some countries, it is not permitted to seize undeveloped land that is owned by the debtor, unless the land is directly connected with the debt itself. Other countries place limits on the seizure of certain types of property such as the primary residence of the debtor, while allowing the seizure of secondary properties that the debtor does not claim as a primary residence. Again, this is based on the assumption that the primary residence is not directly related to the debt that is being settled by the lien.

When the general lien is imposed to settle debts such as outstanding taxes owed to a local or national government tax agency, there are rarely any real limitations on the general lien. The agency can invoke a lien that includes the right to seize both real and personal property, as well as the balances of bank accounts and even the wages and salary of the debtor. In any case, the lien remains in effect until the total balance of the debt is paid.

The imposition of a general lien is usually considered a last resort. Most entities will attempt to work out payment arrangements with a debtor before proceeding with this serious step. Only in situations where the debtor has been unresponsive or hostile to those attempts with the situation escalate to the point where a general lien is imposed.