possessory lien

A possessory lien is a lien that secures payment or performance of an obligation for services or materials provided in connection with goods, where the lienholder retains possession of the goods until payment is made. It generally arises by statute or operation of law in the ordinary course of business, such as when a mechanic, repairer, or artisan retains property until compensated for labor or materials supplied.

The validity and value of a possessory lien depend on the lienholder’s continued possession of the goods. Once possession is voluntarily surrendered, the lien is usually extinguished. Under California Civil Code § 2913, voluntary restoration of property to its owner terminates a lien dependent on possession unless the parties agree otherwise, and the lien is also extinguished as to later good-faith purchasers or creditors. Possessory liens do not include security interests or agricultural liens as defined in the Uniform Commercial Code (UCC).

[Last reviewed in October of 2025 by the Wex Definitions Team] 

Keywords

• secured transactions

Wex

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• commercial activities
• PROPERTY
• property & real estate law
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