Chapter XVIII Lien

Article 230 If a debtor defaults, the creditor may retain the debtor’s movables which have been legally possessed by the creditor and shall have the priority in being paid with the said property.

The creditor mentioned in the preceding paragraph is the lien holder, and the movables in his possession are the retained property.

Article 231 The movables retained by the creditor fall in the same nexus of legal relationships with the creditor’s claims, except in the case of a lien between enterprises.

Article 232 The movables may not be retained as are so stipulated by law or by agreement between the parties concerned.

Article 233 Where the retained property is dividable, the value of the retained property shall be equivalent to the amount of the debts owed.

Article 234 The lien holder shall have the duty to safekeep the retained property. If the retained property is damaged, destroyed or lost due to improper keeping, the lien holder shall be liable for compensation.

Article 235 The lien holder shall have the right to collect the fruits accrued from the retained property.

The fruits mentioned in the preceding paragraph shall first be used to pay the expenses for collecting the fruits.

Article 236 The lien holder and the debtor shall reach an agreement on the time limit for the debtor to pay the debts after the property is retained. If there is no such agreement or if the agreement is indefinite, the lien holder shall allow a time limit of two months or longer for the debtor to pay the debts, except where the movables are fresh, living or perishable things. If the debtor defaults at the expiration of the specified time limit, the lien holder may upon agreement with the debtor have the retained property converted into money, or may enjoy the priority in having the debts paid with the proceeds from auction or sale of the property.

The retained property shall be converted into money or be sold off by referring to its market price.

Article 237 The debtor may request the lien holder to enforce the right of lien after the expiration of the time limit for payment of the debts. Where the lien holder fails to enforce the right, the debtor may request the people’s court to have the retained property auctioned or sold.

Article 238 If after the retained property is converted into money, auctioned or sold, the proceeds therefrom exceed the amount of the claim, the balance shall go to the debtor, and if they are insufficient to cover the debts, the difference shall be paid by the debtor.

Article 239 Where a lien is created on the same piece of the movables that has been mortgaged or pledged, the lien holder shall enjoy the priority in having his debts paid.

Article 240 Where the lien holder forfeits his possession of the retained property or accepts other security provided by the debtor, the right of lien shall extinguish.