LIEN (Heb. שִׁעְבּוּד נְכָסִים, Shibud Nekhasim).
Jewish law enables the creditor to exercise a lien over all the debtor's property, in addition to his remedies against the debtor personally. This lien automatically comes into existence on the creation of the obligation and is called aḥarayut or shi'bud nekhasim (i.e., "property bearing responsibility" or the "encumbrance of property"). Sometimes the parties may limit the application of the lien to a specified part of the debtor's property, in which event it may operate either in addition to the general charge on the debtor's property, or so as to release the remaining property from any such encumbrance. A limitation of the lien to a specified asset may be effected in two ways: firstly, by the asset remaining in the debtor's possession, in which event the lien is called apoteke (see below); secondly, by the debtor surrendering possession of the asset to the creditor, this being called mashkon, i.e., pledge. The law relating to the latter is dealt with fully under *pledge.
Import of the Term Aharayut Nekhasim
Originally, the general lien applied only to the real estate (karka, "land") of the debtor, because land could not be carried away or spoiled and was therefore deemed "property bearing responsibility" (Kid. 1:5). Chattels were regarded as incapable of being preserved and were therefore deemed property "not bearing responsibility" (ibid.). The special reasons for the availability in Jewish law of the automatic lien in respect of all obligations will be dealt with below and in the article on *Obligations.
The concept of a charge on assets is already mentioned in a takkanah from the time of Simeon b. Shetaḥ, concerning a husband's written undertaking to his wife that all his property shall be charged in her favor to secure the repayment of her *ketubbah (Ket. 82b); it may be assumed that a charge of this nature was known at that time in respect of other obligations as well. In the third century the amoraim Ulla and Rabbah disputed the question whether a charge of this nature originated from Pentateuchal law (shi'buda de-oraita) or from rabbinical enactment (de-rabbanan). According to some of the rishonim, this dispute related only to the question of seizing assets which had been alienated by the debtor to a third party, and that as long as the assets remained with the debtor all agreed that they were subject to the Pentateuchal lien (Tos. to bb 175b and Bet ha-Beḥirah thereto). Other rishonim were of the opinion that the dispute was one of principle, whether or not the encumbered assets had been alienated, namely: whether the right of recovery of the debt in this way flowed from the personal aspect of the obligation, as was the case when the creditor recovered payment out of the chattels of the debtor, or whether in relation to land the creditor acquired a lien also in the nature of a rent right, in addition to the personal obligation (Rashbam, Tos. to bb 175b; Nov. Rashba, ibid.; Nov. Ritba Kid. 13b; see also See also Elon, Ha-Mishpat Ha-Ivri, i, 485–490; Kevod Ha-Adam… 21). The halakhah was decided in accordance with the view of shi'buda de-oraita (Yad, Malveh, 11:4; Sh. Ar., Ḥm 111; Sma ibid., n. 1).
Substance of the Creditor's Right in the Debtor's Property
The creditor's general lien over the debtor's property does not allow him a full proprietary right (zekhut kinyanit). This finds expression mainly in two respects. Firstly, the right of lien does not preclude the debtor from validly transferring ownership of his property to another, albeit subject to the fact that the creditor, when seeking to recover payment, is entitled to seize the property from the party who acquired it (this right of seizure is known as terifah, from the nekhasim meshu'badim, i.e., the "encumbered and alienated property"). As will be seen below, special rules were laid down governing the right of seizure from any such transferee. Secondly, the lien is subordinate to, and dependent on, the debtor's own ownership in the property, and hence the latter, in certain circumstances, is able to oust or extinguish the creditor's lien over his property.
Recovery of the Debt out of Encumbered Assets
It is a substantive principle that a debt may not be satisfied out of the nekhasim meshu'badim (see above) as long as the debtor is possessed of other assets, i.e., nekhasim benei ḥorin ("free property"), even if the remaining assets are inferior to those to which the creditor is entitled (e.g., the free assets are beinonit or average, whereas the obligation is tortious and must therefore be satisfied from the iddit, or best). If the debtor has sold the encumbered property to several purchasers, the creditor must first recover from the last purchaser, since the anterior one may plead: "I have left you room to recover from him." Similarly, the purchaser retains the right to pay in cash rather than surrender the encumbered property. Where there are several creditors, a preferential right of lien over the debtor's property will be enjoyed by the creditor to whom the debtor first became indebted (Git. 48b; bk 8a; Sh. Ar., Ḥm 104; see also *Execution (Civil)).
Creation of the Debt
As long as the debtor's property remained in his possession, there would be no need to limit the creditor's lien therein, as mentioned above. However, there was good reason for limiting the right of seizure from the transferee of the encumbered assets only to cases where the debt was originally evidenced in writing (i.e., milveh bi-shetar, "loan by deed") and not orally (milveh be-al peh). The amoraim disputed the legal justification of this limitation (bb 175b). In the opinion of Ulla, the law entitled the creditor to seize encumbered land from the purchaser even for an orally established debt, except that the scholars had regulated against it in order not to cause loss to the purchaser of such land, since an "oral" debt had no kol ("publicity," lit. "voice") and the purchaser would therefore have no notice of the land's encumbrance in favor of the creditor. On the other hand, Rabbah was of the opinion that the law did not recognize the institution of aḥarayut nekhasim at all, and the creditor's right to recover from the debtor's property, including land, derived from a personal liability only, which could not be enforced except against the debtor's free property (see above). However, the scholars enacted that, in the case of a debt evidenced in writing and constituting notice, the creditor could seize the debtor's property from the purchaser, for otherwise the creditor would have no security for the repayment of the debt, and thus no borrower would ever be able to obtain a loan. The need to secure repayment of the debt in such a firm manner so as to forestall any reluctance to grant a loan most probably stemmed from the fact that in Jewish law the prohibition against interest precluded the earning of any profit from the actual loan, and accordingly the principal at least had to be adequately secured. From its application to a liability originating from loan, this rule was also extended to other obligations (L. Auerbach, Das juedische Obligationenrecht, 1 (1870), 172). Since the reason for precluding seizure from the purchaser in the case of an oral debt was to avoid loss because he had no notice of the debt's existence, R. Pappa decided that the creditor could seize the land of the debtor if the third party into whose hands it had passed was the heir of the debtor (bb 176a; but cf. the opinion of Rav, tj, bk 10:1, 7b and bm 1:6, 8a; bb 175a and the opinion of Samuel there); the halakhah was decided accordingly in the codes (Yad, Malveh 11:4, Sh. Ar., Ḥm 107:1).
In post-talmudic times various takkanot were enacted, laying down that a debt was not to be considered a written one unless the deed was written and signed by a scribe and witnesses specially appointed for the purpose (see Sh. Ar., Ḥm 61:1), whereby the maximum notice and warning were thus afforded to potential purchasers – in much the same way as mortgages are registered in land registry offices at the present time.
A debt established by deed provided the right of exacting payment out of encumbered property, even if not so expressly stipulated – the omission being attributed to "an error of the scribe" (bm 14a; 15b). With regard to an obligation stemming from the ketubbah, this rule was specifically endorsed in a special enactment (Ket. 4:7). An exception to the rule distinguishing between oral obligation and one by deed was recognized in the case of land sold with a guarantee (i.e., in respect of claims by third parties against the land) in the presence of witnesses, even without a deed. In this event the purchaser could exact the purchase price from the encumbered property, it being considered that a sale of land before witnesses would become known even in the absence of a written instrument (bb 41b and codes). Similarly, and for the same reason, the creditor could exact payment from the debtor's encumbered property if there was an obligation established by way of a kinyan before witnesses (see *Acquisition; bb, 40a; Sh. Ar., Ḥm 39:1).
Seizure for a Debt of Fixed Amount Only
The scholars regulated "for the sake of good order" (mi-penei tikkun olam) that recovery could be made out of encumbered assets only for a debt of a fixed amount and not otherwise, e.g., in respect of maintenance for a wife and daughters (Git. 5:3, 50b and codes).
Debts Stemming from Tort
According to tannaitic law, an injured party could recover all the various measures of compensation from nekhasim meshu'badim (even though not stipulated in the deed; Tosef., Ket. 2:2). However, the amoraim disputed the question of whether an obligation imposed by law was subject to the same rules as one agreed upon in a deed (Bek. 49b et al.). In the light of the rule that a debt for an unspecified amount was not recoverable from encumbered assets, it would seem that there was room for extending the limitation also to a debt stemming from tort, for precisely the same reasons. The matter remained a disputed one, however, even in the codes (see e.g., Tos. to bk 8a s.v. כול; Beit YosefḤm 119 n. 4).
Any obligation not recoverable out of nekhasim meshu'badim becomes recoverable in this way in consequence of a judgment of the court on a claim submitted (bb 175b; bk 104b–105a).
Encumbrance of Assets
Originally, the law was that a lien extended only to assets in the possession of the debtor at the time the debt was created (cf. the ancient wording: "all the property that I have," Ket. 4:7; Tosef., Ket. 4:7; Tosef., Ket. 12:1), and property later acquired could not be seized by the creditor once it had been transferred to a third party (Yad, Malveh 18:1; Sh. Ar., Ḥm 112:1). In order to increase the creditor's security, however, the scholars prescribed that if, at the time the debt was created, the debtor agreed that property he might acquire in the future would also be subjected to the lien, this would also form part of his encumbered assets, i.e., from the time it came into his possession (tj, Ket. 4:8, 29a; bb 44b). This rule was discussed in the light of the principle that a person could not transfer ownership of something not in his possession (reshut; see *Contract), but the distinction was made that one could nevertheless encumber property in this manner (bb 157 a/b; Yad, Malveh 18:1; Sh. Ar., Ḥm 112:1). The opinion is expressed in the codes that, in view of the rule of "the scribe's error" (see above), the lien also extended to assets acquired by the debtor after the creation of the debt, even if not expressly agreed to by him when the obligation came into being (Rema, Ḥm 112:1).
Chattels as Nekhasim Meshu'badim
In the amoraic period the rule that a lien extended only to the debtor's land underwent a variation: it was laid down that if, at the time of creation of the debt and as security for it, the debtor expressly charged the chattels incidental to his land (agav karka; see *Acquisition), the lien would also extend to such chattels, whether they were in his possession or acquired thereafter (bb 44b; Yad, Malveh 18:2; Sh. Ar., Ḥm 113:1–2). The extension of the lien in this manner was due to the fact that the number of landowners had diminished and the lien, if limited to land alone, would have failed to provide adequate security for the repayment of a debt. With the intensification of this economic trend in geonic times, the practice was accepted of kinyan ("acquisition") incidental to land – even if the debtor owned none at all – involving the doctrine of the "four cubits [arba ammot] in Ereẓ Israel" said to be possessed by every Jew. For the same reason a special takkanah was enacted in the geonic period, making it possible – contrary to talmudic law (see Ket. 92a) – for the creditor also to exact payment out of the debtor's chattels acquired by his heirs (Ḥemdah Genuzah no. 65; cf. justification of the rule on similar grounds, Rashbam bb 174a; see also Yad, Malveh 11:11; Sh. Ar., Ḥm 107:1).
This takkanah concerning the seizure of the debtor's chattels after they passed into the hands of his heirs was unlikely to create difficulty, since it was only proper that the heirs should fulfill the obligations of the deceased. However, so far as purchasers were concerned, the growing practice whereby even one's chattels were charged on the creation of an obligation, caused the creditor's consequent right of seizure to be a serious obstacle to business transactions. Accordingly, the earlier practice was reverted to, and it became accepted that the creditor would not recover from chattels sold to a third party, even though the debtor had expressly agreed in the deed to charge such of his chattels as were incidental to land – this being justified by the takkanat ha-shuk ("market overt") – for otherwise no person would be able to buy any chattel from his neighbor for fear that a lien existed in favor of his creditors (Resp. Rosh 79:5; also 4 and 6; Tur, and Sh. Ar., Ḥm 60:1; but cf. also Siftei KohenḤm 60, n. 4, where the custom is contested).
To counter the fear of prospective purchasers that property acquired from a seller was subject to being seized by the latter's creditors, the practice was adopted – in terms of a takkanah enacted in the Middle Ages and observed in many communities – whereby at the time of the sale of land any person claiming a right or lien over the property in question was publicly called upon to come forward within a period of 15 days (Resp. Rashba, vol. 6, nos. 6–7) or 30 days (idem, vol. 2, no. 95) and establish his claim, failing which he would lose his right, and would thenceforth be precluded from raising any objection to the sale and from making any claim by way of lien or otherwise over the property (see also Resp. Rosh no. 18:16; Tur, Ḥm 104:3; Resp. Ritba, no. 156).
Cancellation and Extinction of Lien
The creditor's lien over the debtor's property is extinguished by the cancellation of the underlying obligation – i.e., by the repayment of the debt or the debtor's release from it – and hence "a deed which has been borrowed on and repaid cannot be borrowed on again, since release has already been granted from its lien" (Ket. 85a). The creditor may, however, relinquish his lien in favor of one purchaser while retaining it in respect of other purchasers (Ket. 95a and codes), and he may also release part of the encumbered assets from the operation of the lien, while retaining it in respect of other parts (Tur and Sh. Ar., Ḥm 111:12). In both cases the release has no validity unless formally effected by way of kinyan (ibid.; also 118:1).
As mentioned above, the creditors' lien does not amount to an independent proprietary right, but is subject to the debtor's own ownership of the encumbered property. Hence, the termination of the latter's ownership of the property may, in certain circumstances, automatically extinguish the creditor's lien therein. The Talmud mentions three cases in which the creditor's lien is extinguished as a result of the debtor's loss of ownership of the encumbered property: when the proprietor has made an irredeemable consecration (kedushat ha-guf; see *Hekdesh) of the property, in which event it is thereafter and for all time placed beyond the ownership of the common man (hedyot; Git. 40b; Tur and Sh. Ar., Ḥm 117:7) – according to Maimonides a redeemable consecration (kedushat dammim) also extinguishes the lien, save that the creditor may seize the property if and when it is redeemed (Yad, Malveh 18:6–7; Arakhin 7:14–16); when there is a prohibition against deriving benefit from the property, e.g., Ḥameẓ ("leaven") during Passover, which has the effect of nullifying ownership of the property; and when the property in question is a slave manumitted by his owner, since thereupon the right of ownership is totally extinguished (Git., Yad; Sh. Ar., ibid.; and see below).
(אַפּוֹתֵיקֵי). Apoteke is distinguished from the implied general lien by the fact that it is limited to a specific part of the property of the debtor, in whose possession it remains. The term is of Greek origin and in several tannaitic sources is rendered as "הִיפּוֹתֵיקֵי" (hippoteke; Tosef., Shev. 8:6; Tosef., 11:8; Tosef., bm 1:8). Despite this Greek origin, however, in its substance and legal rules apoteke is in Jewish law similar to the general lien, and in fact it differs from the Greek hypothec (ύποθήκη) in essential principles (see below). In effect, apoteke does not create a new charge on the property in question, since all the debtor's property is included in the implied, comprehensive charge that comes into existence upon creation of the obligation, but merely serves to restrict an already existing charge to particular assets. For this reason, Jewish law sources make no specific mention of the term shi'bud apoteke, but speak of "defining" or "setting aside" a field (Git. 37a; Ket. 54b, 55a, 81b; bb 50a; tj, Shev. 10;1, 39b), i.e., singling out of a particular asset from the generally charged property. The rishonim interpreted the term apoteke as a *notarikon (from אפה תהא קאי, i.e., "on this it shall stand": Arukh ha-Shalem, s.v. אפתק; Rashi bk 11b; Rashbam bb 44b; or from פה תָּקָּנה – Maim., Comm. to Git. 4:4). The rule is that the creditor may only exact payment from the hypothecated property in respect of such obligations as would serve to create in his favor a general lien over the debtor's property, i.e., a debt by deed and not an oral one, etc. (Beit Yosef, Ḥm 117, n. 3). Talmudic sources indicate that the apoteke itself had to be created by deed (Tosef., Shev. 8:6); but it was later laid down in the codes that an apoteke could be created before witnesses without deed, although the underlying obligation itself had to be under deed (Beit Yosef, loc. cit.).
The hypothecated property generally consisted of land, but instances are also mentioned where the apoteke attached (inter alia) to slaves (Git. 4:4) and to a bond of indebtedness, e.g., the ketubbah (Tosef., Ket. 11:1; Rashi's interpretation, in commenting on Ket. 54a, that the apoteke is effected specifically in relation to the land of the wife included in the ketubbah does not accord with the plain meaning of the Tosefta statement, but shows the influence of Rava's ruling; see below); and to chattels collectively (to a Havilah, "bundle"; Tosef., Ket. 11:8). In the fourth century it was laid down by Rava in Babylonia that a hypothecated slave who had been sold could be seized by a creditor in recovery of his debt, since the sale of a slave carried a "voice" and purchasers would have warning, whereas the sale of a hypothecated ox or ass carried no "voice," and therefore these were not recoverable from a purchaser in settlement of the vendor's debt. Even then, however, a hypothecated slave afforded only limited security for the creditor, since already in the Mishnah it was prescribed that a slave manumitted by his owner, i.e., the debtor, could not be seized in recovery of the latter's debt (Git. 4:4) because his manumission extinguished the charge (tj, Yev. 7:1, 8a and see above). This was in accordance with the fundamental doctrine of human liberty that "a slave, once liberated, does not return to servitude" (tj, Pes. 2:29a). Hence it was not common to execute apoteke, not even in respect of slaves, and apoteke came to be equaled with the general lien, attaching to land only and not to chattels. Later this was enshrined in the codes in absolute manner, to the effect that no (alienated) hypothecated chattels of any kind were recoverable in payment of a debt since they carried no "voice," even if the apoteke was executed by deed and the purchaser had notice of it (Tur and Sh. Ar., Ḥm 117:3; see also Sma, Ḥm 117, n. 13).
Simple and Express Apoteke
(apoteke setam and apoteke meforash). Jewish law recognizes hypothecation of a specific asset in two different ways, each having its own rules concerning the creditor's right of recovery from such an asset. In the first case, referred to in the codes asapoteke setam (Tur, Ḥm 117:1), the debtor gives a written undertaking to his creditor that if he should fail to repay the debt, "you may recover from this asset." As long as the debtor fails to repay the debt in cash and the asset remains in his possession, the creditor is entitled to exact payment out of such an asset and the debtor is not entitled to offer substitute assets. If the hypothecated asset should not suffice to repay the debt, or becomes spoiled, or ceases to exist, the creditor may recover payment out of the debtor's other assets (Git. 41a; Yad, Malveh 18:3; Sh. Ar., Ḥm 117:1). Just as the general lien does not preclude the debtor from selling his assets, so he is also free to sell assets subject to a simple hypothecation. As long as he retains any free property, the creditor may not recover his debt out of such hypothecated assets alienated by the debtor (tj, Yev. 7:1, 8a; Git. 41a). If the debtor has no free property, the creditor may recover from the hypothecated property in a purchaser's hands, even if other encumbered assets were alienated by the debtor after his alienation of the hypothecated property; in this respect apoteke gives the creditor a right that ranks in preference to that available to the creditor under the general lien (see above). However, the purchaser of hypothecated property – like the debtor himself – retains the right to repay the debt in cash (Yad, Malveh 18:4, 8, and Maggid Mishneh, ad. loc. Sma, Ḥm 117 n. 8).
Simeon b. Gamaliel expressed the opinion that alienation was forbidden of assets hypothecated in favor of a woman's ketubbah, since "a woman is not in the habit of having recourse to the courts," and that she could recover her ketubbah from the hypothecated property only, and not from the remaining property in her husband's possession (Git. 41a). Apparently, however, he too was of the opinion that, if the hypothecated property did not equal the value of the ketubbah, or if it depreciated, the wife could recover from the remaining property of her husband (cf. Ket. 4:7; Tosef., Ket. 11:8; see Gulak, Ha-Ḥiyyuv ve-Shi'budav, 55). The halakhah was decided in accordance with the opposing view of the scholars, so that no difference is recognized between the ketubbah obligation and any other obligation (Yad and Sh. Ar., loc. cit.).
Express apoteke (termed apoteke meforash in the codes) is constituted when the debtor makes a written declaration to the creditor that "you shall not recover payment except out of this [asset]" (lo yehe lekha pera'on ella mi-zo, Git. 41a; bm 66b; tj, Ket. 10:6, 34a). In this event no charge attaches to the debtor's remaining property, and hence, if the hypothecated property should be spoiled, the creditor may not recover payment out of the debtor's free property nor out of other property alienated by him to a third party (Git. 41a). Expressly hypothecated property also does not provide the creditor with an absolute proprietary right therein. Thus, if its value exceeds the amount of the debt, the creditor must return the balance to the debtor. Furthermore, while the amoraim of Ereẓ Israel disputed the question of whether the debtor could alienate expressly hypothecated property (tj, Shev. 10:1, 39b), it appears from the Babylonian Talmud that he may do so, except that the creditor can exact payment out of the hypothecated assets in the purchaser's possession even if the debtor has any free property, and except, further, that the purchaser is not entitled to pay in cash in lieu of the hypothecated property, as he may do in the case of simple hypothecation (bk 96a; the debtor himself retains the right to pay in cash in both cases). The halakhah was decided in the codes in accordance with the latter view (Tur and Sh. Ar., Ḥm 117:1; Sma Ḥm 117, n. 5 and 6). Basically, therefore, express hypothecation afforded the creditor no greater rights than did simple hypothecation, whereas it did serve to deprive him of the general lien over all the other property of the debtor, and Gulak (Ha-Ḥiyyuv… p. 59f.) correctly surmises that its main purpose was to promote the free transaction of land sales by freeing all but a distinct part of the debtor's property from the creditor's lien.
In the State of Israel
The law in Israel recognizes no implied general lien of the kind known in Jewish law, but allows for the bonding of a specified asset in the creditor's favor by way of pledge or mortgage. A real estate mortgage is registered in the Land Registry Office, whereupon the mortgagor may not transfer ownership of the property without the consent of the mortgagee.
For further particulars see *Pledge.
Lien as Obligation and Lien as Security
A lien (aḥarayut nekhasim/shibud nekhasim) is a creditor's proprietary right to the debtor's assets to secure repayment, i.e., a case where the creditor, if not repaid in accordance with the terms agreed upon by the parties, is entitled to collect payment from encumbered assets. In such a case, a lien is a secondary right and terminates upon payment of the debt. Indeed, a lien may also be created as a primary right, whose realization is either conditional or without condition. In the case of a lien as a primary right, only the term "shi'bud nekhasim" applies.
The meaning of the term "aḥarayut" is "substitute," or "another thing." The substitute may be for a ritual sacrifice one pledged to bring and was lost, or for an asset that was sold and it subsequently transpired that it did not belong to the seller. "Aḥarayut nekhasim" refers to property which serves as a substitute for fulfilling an obligation, generally the payment of money. The property is a guarantee (suretyship) just as a guarantor (surety) is a substitute for the principal debtor (bb 174a). This concept of substitute is reflected in the wording in all bonds: "all my assets may be considered a substitute and serve as a guarantee."
A lien on property may be explicitly created by the owner – the debtor, or implicitly, if we consider that "aḥarayut ta'ut sofer," that is: it is presumed that the parties intended to stipulate the lien in the document, and its omission is the result of a scribal error. A property lien is automatically and not consensually created regarding a person's Scriptual obligations, which do not depend on the person's consent for its imposition on his property. There are those who have given this interpretation to the term "shi'buda de-oraita," and not, as it is usually interpreted, that the term means that this kind of lien has its origin in Pentateuchal law.
[Berachyahu Lifshitz (2nd ed.)]
The Solution of an Actual Legal Problem based on Jewish Law
As stated above, in Israeli law, as well as in other modern legal systems, a property lien on a particular asset belonging to the debtor can be used to secure a loan. In other words, a property lien is a fixed lien, of a proprietary nature, that continues to "attach" itself to the asset even after the asset has been transferred to another party. This lien, common in Israeli law, is similar to the explicit apoteke, which is an unusual lien in Jewish law.
In modern law, the term "floating charge" indicates an imposition of a non-fixed charge on a non-defined set of assets. A floating charge is generally imposed by granting credit to businesses, with the lien imposed on the debtor's entire business inventory. The floating charge differs from the permanent charge in two respects: First, it applies to assets that at the time of its imposition were not in the debtor's possession. Second, from the moment that the debtor sells any item of the inventory, the charge no longer applies to that item. The purpose of this kind of charge, originating in English law, is to allow businesses to receive credit and to establish a charge for that credit, without it intruding on continued commercial dealings.
In summary, under Jewish Law, liens bear certain similarities to the floating charge. Under Jewish law, at the time of taking a loan, all of the borrower's property is placed under lien to the benefit of the lender, including his chattels (Yad, Malveh ve-Loveh, 18:1). Such a lien may also be imposed on future property not yet in the borrower's possession ("d'ikne"), and according to some of the posekim, a lien applies to property that is not in the possession of the borrower, even if this was not explicitly stated (Rema, Ḥm 112:1). The sale of chattels encumbered by a lien terminated the lien with respect to such chattels, and the creditor is not entitled to recover them from the buyers (Resp. Rosh, no. 79.5; Tur, Sh. Ar., Ḥm 60:1). A comparison between these principles of lien in Jewish law and the characteristics of a floating charge shows a great deal of similarity between the "normal" lien under Jewish law and the floating charge of the modern law.
The law in Israel expressly relates to a floating charge only in the Companies Ordinance [New version], 5743 – 1983, and thus the accepted view is that the floating charge may be imposed only on a company's assets. A case was brought before the District Court in Jerusalem (ca 6063/05, Atzmon v. Bar Levav; per Judge Noam Solberg) where, pursuant to a contract, a floating lien was imposed on a person's unincorporated business. The question before the Court was whether a floating lien could be recognized as the asset of an individual, even though it is not expressly recognized in the law. The Court decided that, despite the fact that the law does not expressly relate to such a possibility – it does not negate it. From the perspective of policy considerations, the Court presented the considerations that support recognizing a floating lien on the assets of an individual and the opposing considerations. In deciding the case, the Court gave preference to the consideration of freedom of contracts, pursuant to which it is appropriate to give force to the agreement between parties to a contract to the extent possible. However, in light of a lacuna, and pursuant to section 1 of the Foundations of Law Law, 5740 – 1980, which provides that in the case of a lacuna the court should look to the "principles of freedom, justice, equity and peace of the Jewish tradition," the Court referred to Jewish law. After examining the general characteristics of a lien under Jewish law, the court stated that "indeed, the classic and common lien in the Jewish law is fundamentally similar to the floating charge." The Court's decision discussed the shared foundation of the "regular" lien under Jewish law and the modern floating charge, insofar as they apply to all of the debtor's assets, as stated above. In addition to this similarity, the court also considered that one of the justifications given in the Jewish law for the existence of the possibility of encumbering future assets, in contravention of the rule that transactions cannot be carried out in future assets – is facilitating commerce and the process of receiving loans – "so that doors will not be shut before the borrowers" (Keẓot ha-Ḥoshen, Ḥm. 112:1) This is also the main reason offered as a justification for the takkanah of the geonim that provides that chattels as well as real property may be encumbered by a lien to the creditor (Rashbam, bb 157a). The Court concluded from its analysis of these Jewish law principles that "there is a goal to facilitate the conduct of commerce, to improve it, to make credit available, and to improve the financial well-being" in relation to the law of liens and views in the position of the Jewish law and impetus for recognizing the floating charge on the assets of an individual in the Israeli law.
[Menachem Elon (2nd ed.)]
I.S. Zuri, Mishpat ha-Talmud, 4 (1921), 61–67; Gulak, Yesodei, 1 (1922), 141f., 149–65; 2 (1922), 8–10; idem, in: Madda'ei ha-Yahadut, 1 (1925/26), 46–48; idem, Oẓar, 235–8; idem, Das Urkundenwesen im Talmud… (1935), 114–25; idem, Toledot ha-Mishpat be-Yisrael bi-Tekufat ha-Talmud, 1 (Ha-Ḥiyyuv ve-Shi'budav, 1939), 31–61; Herzog, Instit, 1 (1936), 339–63; et, 1 (19513), 216–20; 2 (1949), 130–4; 5 (1953), 121–32. add. bibliography: M. Elon, Ha-Mishpat ha-Ivri (1988), 1:193, 195, 346, 404, 458f, 467, 476f., 484, 485–90, 531, 537, 551, 569, 600, 601, 775f.; idem, Jewish Law (1994), 1: 217, 219, 416, 3:492, 559f., 569, 580f., 590, 591–96, 646, 654, 670, 699, 743, 744, 953f.; idem, Kevod ha-Adam ve-Ḥeruto be-Darkhei ha-Hoẓa'ah le-Po'el (2000), 1–23; M. Elon and B. Lifshitz, Mafte'aḥ ha-She'elot ve-ha-Teshuvot shel Hakhmei Sefarad u-Zefon Afrikah (legal digest) (1986), 1:5–9, 21, 250–54; 2:533–34; B. Lifshitz and E. Shochetman, Mafte'aḥ ha-She'elot ve-ha-Teshuvot shel Ḥakhmei Ashkenaz, Ẓarefat ve-Italyah (legal digest) (1997), 5, 19, 184–85, 358; B. Lifshitz, Shibuda de-Oraita – Bein Ḥiyyuv le-vein Betuḥa, Sefer ha-Yovel le-Rabinowitz (5756), 65–95; H. Poversky, Shibud Nekhasim ba-Mishpat ha-Ivri, 12, Dinei Yisrael (5744 – 5745), 155–71; I. Warhaftig, Ha-Hitḥayyevut (5761), 17–52.
A right given to another by the owner of property to secure a debt, or one created by law in favor of certain creditors.
A lien is an encumbrance on one person's property to secure a debt the property owner owes to another person. The statement that someone's property is "tied up" describes the effect of liens on both real and personal property. Lien is a French word meaning "knot or binding" that was brought to Britain with the French language during the Norman Conquest in 1066.
Real Estate Liens
In many states a mortgage is regarded as a lien, not a complete transfer of title, and if not repaid the debt is recovered by foreclosure and sale of the real estate. Real estate is also affected by liens that favor local, state, and federal governments for real estate taxes and special assessments; state and federal governments for income and sales or use taxes; condominium and homeowners' associations; and general contractors, subcontractors, material suppliers, and laborers for the value of work or materials installed on real estate. The filing requirements and statutes of limitations for these liens vary according to the law of each state.
Perhaps the riskiest move a purchaser of real estate can make is to buy without making certain that there are no liens on the property or without obtaining title insurance against liens on the property. In many states liens are secret: that is, they are hidden from the public records until required to be filed.
The priority of liens on a construction project relates back to the first visible commencement of the work. This line of law makes the last work, perhaps landscaping, equal in priority to the first, excavating. This means that during the entire work of construction, the owner must obtain waivers of lien from each subcontractor and material supplier. Without these waivers the real estate is subject to liens of all such claimants, if the general contractor, though paid in full, fails to pay them. A waiver is a voluntary relinquishment of a known right. Waivers of lien must be in writing, give a sufficient description of the real estate, and be signed by the one claiming a lien. No payment need be made if the claimant agrees to release the land from the lien and rely only on the credit of the owner or general contractor for payment of the debt.
Lien claimants are protected in this way because all their materials and labor are "buried" in the real estate, having become part of it. They cannot be reclaimed without irreparable damage to the property. Unlike mortgage liens, the liens of these claimants, called mechanic's liens, offer no redemption in a foreclosure judgment.
The published statutes of a state usually have a section on the topic of liens under which is listed most or all of the liens allowed by state law. A great number of persons in trade or business obtain liens for their services to personal property: garage keepers and warehouse owners for unpaid rent for storage; automobile mechanics for repairs; jewelers; dry cleaners and furriers; artisans for restoration of art objects; bankers; factors dealing in commodities; and many others. Not to be outdone, attorneys have a lien for their fees and may retain clients' files—perhaps containing vital information or documents needed by the client for work or family affairs—until the fees are paid.
A judgment lien can, when entered by a court after a suit, affect all the real and personal property of one who fails to pay a debt, such as a promissory note to a bank, credit card balance, or judgment for injury the person may have caused. In some states the lien of a properly docketed judgment affects all the debtor's property in every county where notice of the judgment is filed. State law governs the length of time such liens survive—which in some states is as long as ten years. Judgments can be enforced by executions and sale of property until the amount due is satisfied.
Courts of equity have the power to create so-called equitable liens on property to correct some injustice. For example, one whose money was embezzled may obtain a lien on the wrongdoer's property by suing for a constructive trust.
Discharging a Lien
Liens are discharged after a certain length of time. The requirements for commencing their foreclosure vary among the states. If a person pays and satisfies a lien, she should be careful to obtain a written, legally sufficient release or satisfaction, and file or record it in the appropriate government office, so that her title and credit reports no longer show the encumbrance.
lien / ˈlē(ə)n/ • n. Law a right to keep possession of property belonging to another person until a debt owed by that person is discharged.