Key Differences Between General Lien And Particular Lien

A lien is a legal claim or right granted to a creditor over a debtor’s property as security for repayment of a debt or obligation. Liens are broadly classified into General Liens and Particular Liens, each serving distinct purposes.

• A General Lien allows the creditor to retain possession of a debtor's property until all debts are cleared.
• A Particular Lien, on the other hand, is specific to the property on which work or services have been performed.

Understanding Differences Between General Lien And Particular Lien is crucial for businesses, individuals, and professionals managing financial obligations. In this article, we’ll explore their definitions, differences, and applications, along with answers to common questions about liens.

Lien

A lien is a legal claim on someone else's property. It is security for a loan. The lienholder can hold the property until the outstanding loan is paid off, which gives them leverage to ensure that they get paid for their services or improvements.

This means that if you have borrowed money from anyone and have not returned it, the lender (Lienholder) can take possession of any of your property until you repay the loan.

However, liens are also available in two different types, General Lien and Partial Lien, and comply with different rules and regulations.

Meaning Of General Lien

A general lien means that someone can take possession of and use any part of your property or a particular part of a separate property you own, even if the property was not linked to the loan you took.

In simple terms, the creditor has the right to hold the property as security for all obligations owed by the debtor.

Key Points About General Liens

• Broad scope: You can generally place a lien on everything (or category) that the lienholder owns, even for a debt that has nothing to do with that specific property.
• Contract or law requirement: Generally, general liens do not arise automatically. This means they can be based on a written agreement between you and the lienholder or on unique laws governing the profession of certain people, such as bankers.

Examples of General Lien

• Banks can retain your documents or securities until you pay off the debt
• A repair shop can hold your property until you pay the bill.
• Lawyers may hold all documents until you pay their fees.

Particular Lien

A particular lien is a very specific type of claim. It allows someone (called the lienholder) to hold a specific part of your property until you pay off the loan associated with that property.

Key Points About Particular Lien

• Limited scope: A particular lien is for the property you gave possession of. For example, the lien only covers your car, not anything else you own.
• Occurs naturally: Sometimes particular liens arise automatically when someone takes lawful possession of your property for a particular purpose. A written agreement is usually not required.

Example Of Particular Lien

• A mechanic is holding your car for repairs.
• The jeweler holding your ring for cleaning or resizing
• Dry cleaner holding your clothes until you pay the cleaning bill

Section Related To General lien and particular lien

The Indian Contract Act, of 1872, recognizes both general and special liens under specific circumstances:

Section 171: It provides general lien rights to lenders, factors, and attorneys.

Section 170: A particular lien includes what the merchant can retain in the house while paying the installment.

Differences Between General Lien And Particular Lien

Benefits And Limitations Of General Lien

Benefits of General Lien

1. A general lien allows creditors to seize the debtor’s property in general, not just the property that relates to the debt. This way, the creditor will get the various opportunities needed to recover.
2. A general lien is easier to enforce because the creditor does not need to show how much money is due and whether it is attached to possessed property or not.
3. Under a general lien, creditors have more flexibility when giving a debt and can choose which property to seize to take the loan back.

Limitations of General Lien

But general lien has some distinct advantages for creditors Here are the main disadvantages explained:

1. Since general lien applies universally to all assets of the debtor, it is difficult for creditors to identify and then seize them.
2. These are general liens that give creditors the ability to acquire any assets that would otherwise belong to the debtor. It can be very difficult for the debtor to deal with basic living expenses.
3. Potential investors may stay away from investing in a business or property under a general lien as they face the risk of the assets being seized.
4. A general lien indicates that the debtor is prone to defaulting on loans, and this can reduce their credit score. This could mean they won’t be able to get credit in the future.

Benefits And Limitations Of Particular Lien

Benefits of Particular Lien:

1. The lien is attached to a specific asset, and the creditor knows exactly which assets they can seize to recover the debt. This eliminates confusion and simplifies the process.
2. A particular lien is considered more fair because the creditor can only seize the property the lien is attached to on the debt. This allows the balance to remain untouched while the debtor's other assets remain protected.
3. A particular lien allows the debtor to secure assets on which he does not owe anything. This helps the debtor maintain the status quo with the debtor's other assets.
4. If there are multiple liens on the debtor's property, one or more of which are on the lender's property, a general lien is settled before any special lien. This helps favor the special creditor's campaign to recover the amount owed.
5. Particular Liens are common in businesses such as construction and mechanics, in which they are secured on special assets through assets such as buildings or machinery.

Limitations of Particular Lien

1. However, only the amount of the special lien is limited to the particular property to which it is attached. This means that if the value of this property is insufficient to cover the remaining debt, the creditor cannot claim other assets.
2. If that property is lost, stolen, or damaged, the lien holder cannot recover the amount due.
3. Over time, the value of the property or assets may depreciate to such an extent that the creditor cannot recover the full amount.
4. If the borrower does not pay, the lender may need to seize the property to recover the debt. Such a process can be time-consuming, expensive, and legally binding.
5. When the property is sold, if there are multiple liens on a property, the specific lien holder cannot be paid first. This will reduce the amount the lender can recover.

What Are The Similarities Between General And Particular Lien?

• Both require the lender to maintain possession of the property.
• Both types of liens do not give the lender title to the property.
• Both are governed by the Indian Contract Act, of 1872.
• It can serve as a way to secure a debt or obligation.
• Both liens expire when the debt they are attached to is paid or properly withdrawn by the debtor.

Also Read : Steps to Reclaim Property from Illegal Possession

Conclusion

Understanding the Differences Between General Lien And Particular Lien is crucial for managing financial obligations and legal rights effectively. While a General Lien provides creditors broad security over a debtor’s assets, a Particular Lien is limited to a specific property related to the debt. These legal tools play a significant role in protecting creditors while ensuring fair practices for debtors. Whether you're dealing with loans, property claims, or service-related disputes, knowing the difference between these liens can help you navigate financial and legal situations more confidently.

FAQs On General Lien And Particular Lien

Get answers to the most commonly asked questions about General Lien and Particular Lien, their applications, legal implications, and key differences.

Q1. What is the difference between a General Lien and a Particular Lien?

A General Lien applies to all the debtor's assets in the creditor’s possession until full repayment, while a Particular Lien is restricted to the property tied to the specific debt or obligation.

Q2. Which businesses commonly use General Lien and Particular Lien?

General Lien: Often used by banks, attorneys, and financial institutions.

Particular Lien: Frequently employed by service providers like repair shops, carriers, or artisans.

Q3. What are some legal provisions for liens in India?

Liens in India are governed by the Indian Contract Act, of 1872, specifically under Sections 171 (General Lien) and 170 (Particular Lien).

Q4. Can a lienholder sell the property under lien?

Yes, but the ability to sell depends on the type of lien and jurisdictional laws. Generally, prior notice and legal procedures are required.

Q5. How can a lien be removed or discharged?

A lien can be removed once the debt is fully paid or settled. Alternatively, legal intervention may help if the lien is unjust or improperly applied.