Lien vs. Levy — What's the Difference?
By Tayyaba Rehman — Updated on September 27, 2023
Lien is a legal claim against an asset as security for a debt; Levy is a legal seizure of property to satisfy a debt.
Difference Between Lien and Levy
Table of Contents
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Key Differences
A lien is a legal right or interest that a lender has in the borrower's property, granted until the debt obligation is satisfied. It serves as a security interest granted over an item of property to secure the payment of a debt or performance of some other obligation. For example, a mortgage is a type of lien placed on a property, ensuring that the lender can claim the property if the mortgage isn’t paid.
Conversely, a levy is an administrative action that entails the legal seizure of property to satisfy a tax debt or other debt. It’s a more extreme measure compared to a lien and generally implies the legal authority to seize and sell a taxpayer's property to settle a debt. For example, the Internal Revenue Service (IRS) can levy a person’s bank accounts, wages, or physical property if tax obligations are not met.
In distinguishing lien from levy, it is crucial to understand that a lien is a claim made on a property to secure payment, acting as collateral for a debt, whereas a levy involves the actual seizure of the property to satisfy the outstanding debt. The lien only represents a legal claim or a right over a property, but the property remains in the possession of the owner. It is only when the debt is not serviced that the property may be subject to levy and sold off to satisfy the debt.
Lien and levy are significant legal concepts, especially in the realms of finance and real estate. While lien remains a security mechanism representing an encumbrance over property, levy symbolizes the more severe action involving actual confiscation and potentially, the selling of the property. Both are measures to ensure debt repayment, but they operate at different stages and have varying implications for the debtor.
Comparison Chart
Definition
Legal claim against an asset as security for a debt
Legal seizure of property to satisfy a debt
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Purpose
Acts as collateral for a debt
Used to settle outstanding debts
Legal Authority
Represents a legal right to property
Represents legal authority to seize and sell property
Implication
Indicates a right over the property but not possession
Implies actual possession and potential sale
Action Severity
Less severe; does not involve possession of property
More severe; involves taking possession
Compare with Definitions
Lien
A legal right or claim against a piece of property.
A mortgage is a type of lien on a property.
Levy
It implies the legal authority to seize and sell a person’s property.
The county could levy the homeowner’s property due to unpaid property taxes.
Lien
It serves as security for the payment of a debt.
The bank holds a lien against the car until the loan is fully paid.
Levy
Represents a severe action for debt recovery.
Experiencing a levy can be stressful as it involves the loss of property.
Lien
Represents an encumbrance over property.
The lien on the house needs to be cleared before it can be sold.
Levy
Impose (a tax, fee, or fine)
A tax of two per cent was levied on all cargoes
Lien
Does not lead to the automatic sale of the property.
Having a lien on your asset doesn’t immediately mean the loss of the asset.
Levy
Enlist (someone) for military service
He sought to levy one man from each vill for service
Lien
A lien ( or ) is a form of security interest granted over an item of property to secure the payment of a debt or performance of some other obligation. The owner of the property, who grants the lien, is referred to as the lienee and the person who has the benefit of the lien is referred to as the lienor or lien holder.
Levy
An act of levying a tax, fee, or fine
Police forces receive 49 per cent of their funding via a levy on the rates
Lien
A claim upon a part of another's property that arises because of an unpaid debt related to that property and that operates as an encumbrance on the property until the debt is satisfied.
Levy
An act of enlisting troops
Edward I and Edward II had made substantial use of the feudal levy for raising an army
Lien
The right to hold another's property as security for a debt owed.
Levy
To impose (a tax or fine, for example) on someone.
Lien
(obsolete) A tendon.
Levy
To impose a tax, fine, or other punishment on (a person or business).
Lien
(legal) A right to take possession of a debtor’s property as security until a debt or duty is discharged.
Levy
To enlist or conscript into military service
Levy recruits.
Lien
The spleen.
Levy
To declare and wage (a war).
Lien
Alternative form of lain
Levy
To confiscate property, especially in accordance with a legal judgment.
Lien
A legal claim; a charge upon real or personal property for the satisfaction of some debt or duty; a right in one to control or hold and retain the property of another until some claim of the former is paid or satisfied.
Levy
The act or process of levying.
Lien
The right to take another's property if an obligation is not discharged
Levy
Money, property, or troops levied.
Lien
A large dark-red oval organ on the left side of the body between the stomach and the diaphragm; produces cells involved in immune responses
Levy
To impose (a tax or fine) to collect monies due, or to confiscate property.
To levy a tax
Lien
A charge upon real or personal property for the satisfaction of some debt.
The contractor placed a lien on the property due to unpaid bills.
Levy
To raise or collect by assessment; to exact by authority.
Levy
To draft someone into military service.
Levy
To raise; to collect; said of troops, to form into an army by enrollment, conscription. etc.
Levy
To wage war.
Levy
To raise, as a siege.
Levy
(legal) To erect, build, or set up; to make or construct; to raise or cast up.
Levy
The act of levying.
Levy
The tax, property or people so levied.
Levy
The Spanish real of one eighth of a dollar, valued at elevenpence when the dollar was rated at seven shillings and sixpence.
Levy
A name formerly given in Pennsylvania, Maryland, and Virginia to the Spanish real of one eighth of a dollar (or 12½ cents), valued at eleven pence when the dollar was rated at 7s. 6d.
Levy
The act of levying or collecting by authority; as, the levy of troops, taxes, etc.
A levy of all the men left under sixty.
Levy
That which is levied, as an army, force, tribute, etc.
Levy
The taking or seizure of property on executions to satisfy judgments, or on warrants for the collection of taxes; a collecting by execution.
Levy
To raise, as a siege.
Levy
To raise; to collect; said of troops, to form into an army by enrollment, conscription, etc.
Augustine . . . inflamed Ethelbert, king of Kent, to levy his power, and to war against them.
Levy
To raise or collect by assessment; to exact by authority; as, to levy taxes, toll, tribute, or contributions.
If they do this . . . my ransom, then,Will soon be levied.
Levy
To gather or exact; as, to levy money.
Levy
To seize property, real or personal, or subject it to the operation of an execution; to make a levy; as, to levy on property; the usual mode of levying, in England, is by seizing the goods.
Levy
A charge imposed and collected
Levy
The act of drafting into military service
Levy
Impose and collect;
Levy a fine
Levy
Cause to assemble or enlist in the military;
Raise an army
Recruit new soldiers
Levy
The legal seizure of property to satisfy a debt.
The IRS can levy bank accounts for unpaid taxes.
Levy
An action taken to settle outstanding debts.
The government can levy assets when citizens do not pay their taxes.
Levy
A forceful means of debt repayment.
Facing a levy often leaves individuals with limited options to retain their assets.
Common Curiosities
What does Levy mean?
A levy is the legal seizure and selling of property to satisfy a debt or obligation.
Is a Lien a claim or seizure?
A lien is a legal claim or right to a property, not a seizure of property.
What is a Lien?
A lien is a legal claim or interest in a property as security for the payment of a debt or obligation.
Is a Lien public record?
Yes, liens are usually filed in public records.
Can a Lien lead to a Levy?
Yes, if the debt remains unpaid, a lien can eventually lead to a levy.
How can one stop a Levy?
Payment of the outstanding debt or entering into a payment agreement can stop a levy.
Is a Levy immediate?
Levies may have a due process, but once executed, the seizure is immediate.
Can a Levy occur without a preceding Lien?
Typically, a levy does not occur without a preceding lien or legal notice.
Can you appeal against a Levy?
Yes, many jurisdictions allow appeals against levies, but specific procedures must be followed.
Can a Levy be reversed?
A levy can be reversed if it is proven unlawful or if the debt is satisfied.
How long does a Lien last?
The duration of a lien depends on the type of lien and local laws, but many last until the debt is paid.
Can you sell a property with a Lien?
Selling property with a lien can be complex, and usually, the lien must be satisfied before or at sale.
Does a Lien affect credit score?
Yes, having a lien can negatively impact your credit score.
What types of property can be subjected to a Levy?
Real property, personal property, and financial assets can all be subjected to a levy.
How is a Lien established?
A lien is typically established through a contractual agreement or by law due to unpaid debts.
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Written by
Tayyaba RehmanTayyaba Rehman is a distinguished writer, currently serving as a primary contributor to askdifference.com. As a researcher in semantics and etymology, Tayyaba's passion for the complexity of languages and their distinctions has found a perfect home on the platform. Tayyaba delves into the intricacies of language, distinguishing between commonly confused words and phrases, thereby providing clarity for readers worldwide.
