Unpaid vendor’s lien
Unpaid vendor’s lien

The following Property guidance note provides comprehensive and up to date legal information covering:

  • Unpaid vendor’s lien
  • Nature
  • When it arises
  • Subrogation
  • Overage and unpaid vendor's lien
  • When is an unpaid lien excluded?
  • Extent
  • Who is bound
  • Protection
  • Enforcement

An unpaid vendor’s lien operates as a type of equitable charge giving the vendor full security in equity for payment of the agreed purchase price. It applies to freehold and leasehold property.

Nature

This equitable lien is an equitable right to a charge independent of contract and possession. It arises automatically by operation of law.

The unpaid vendor’s lien is founded on the principle that someone who has obtained possession of property under a contract for valuable consideration is not allowed to keep it without payment of the consideration.

An equitable lien is subject to all the usual conditions affecting equitable rights and so relief may be refused if the vendor’s conduct has been improper.

When it arises

Whether an unpaid vendor’s lien arises in a particular case is determined by an objective assessment of the parties’ intentions expressed in their agreement. Their subjective intention is irrelevant.

The lien arises as soon as contracts are exchanged. It does not depend on completion. It subsists even if the vendor executes an outright transfer and parts with possession of the property (and if relevant the title deeds).

The lien arises:

  1. whether the whole or part of the purchase money is unpaid

  2. even though a receipt has been given for it

  3. whether the purchase money is payable as a whole or in instalments

  4. even if the