§ 2.1 – Liens
A lien is a security interest that attaches to specific property. As a security interest, a lien encumbers property to secure payment or repayment of an underlying debt or obligation to a third party. E.g., Matlow v. Matlow, 89 Ariz. 293, 297-98, 361 P.2d 648, 651 (1961) (citing 53 C.J.S. Liens § 1, at 826).
The debt or obligation secured, however, is the “principal thing” and the lien itself is merely an incident or accessory to it. Best Fertilizers of Arizona, Inc. v. Burns, 116 Ariz. 492, 493, 570 P.2d 179, 180 (1977). If the underlying debt or obligation is satisfied, discharged or extinguished, the lien ceases to exist and becomes nugatory. E.g., id.
There are different types of liens. “Conventional liens,” for example, are created by law or contract, whereas courts also recognize “equitable liens” based upon the parties’ intention to create a lien to secure a contractual obligation.1 E.g., Pioneer Plumbing Supply Co. v. Sw. Sav. & Loan Ass’n, 102 Ariz. 258, 264-65, 428 P.2d 115, 121-22 (1967) (citing 53 C.J.S. Liens § 4, at 837-38).
A hybrid-lien also exists called an “equitable lien by agreement,” sometimes referred to as reimbursement rights. As the name suggests, this is a contractual claim where parties “‘contract to convey a specific object’ not yet acquired ‘creat[ing] a lien’ on that object or proceeds as soon as ‘the contractor . . . gets a title to the thing.’” Sereboff v. Mid Atl. Med. Servs., Inc., 547 U.S. 356, 363-64 (2006) (quoting Barnes v. Alexander, 232 U.S. 117, 121 (1914)) (emphasis added).
All liens, however, presuppose the existence of an underlying debt or obligation. E.g., Dorr v. Sacred Heart Hosp., 597...
