Vendor’s Lien Clause

Vendor’s Lien Clause

A vendor’s lien clause is a provision in a contract that grants the seller (vendor) a legal right to retain possession of the property sold until the buyer fulfills payment obligations. This clause is often used in real estate transactions, where the vendor may wish to secure their interest in the property until the purchase price is fully paid.

The vendor’s lien clause creates an implied or explicit lien that allows the vendor to reclaim the property if the buyer defaults on payments. This lien acts as a security interest, ensuring that the vendor has recourse to the property even after it has been transferred to the buyer. The clause can specify the conditions under which the lien can be enforced, such as the timeframe for payments and the consequences of failure to pay.

For example, if a buyer agrees to purchase a property for $300,000 and a vendor’s lien clause is included in the sales agreement, the vendor retains the right to take back the property if the buyer fails to make scheduled payments. This provides the vendor with a measure of protection and encourages the buyer to adhere to the payment schedule. In some cases, the vendor may also have the right to sell the property to recover the owed amount if the buyer defaults.