What is the priority of parties secured by common law and statutory liens?

Possessory Liens - A possessory lien is a common law or statutory interest in an asset that:

• secures a payment for services or material furnished in the ordinary course of business;
• is create pursuant to statute or common law; and
• the asset is under the control of the lien holder. 9-333(a)

A possessory lien, as the name implies, gives priority over other secured parties in situations where an individual has physical possession of the collateral. 9-333(b)

Example: Common types of possessory lien include: repair and storage, boarding of animals, and labor performed or material supplied in course of performance.

Non-Possessory Lien - A non-possessory lien generally arises through judicial or administrative order.

Example: A common form of non-possessory lien is a judgment that is attached to a debtors property.

A possessory lien has priority over an Article 9 security interest, unless the common law or statutory authority for creating the lien indicates otherwise. A non-possessory lien, on the other hand, does not have priority over a security interest that is perfected prior to the establishment of the lien. It does, however, have priority over an unperfected security interest.

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Related Topics

• What is Priority of a security interest?
• What role does perfection play in establishing the Priority of a secured party?
• What are the common conflicts arising as to priority of a security interest?
• What is the priority of parties secured by common law and statutory liens?
• Lien - Definition
• Blanket Lien Definition
• Unperfected Lien
• Possessory Lien 
• Non-Possessory Lien 
• Tax Lien
• Mechanics Lien Definition
• Construction Lien
• Cloud on Title
• Priority of a buyer of collateral that is subject to a security interest