Meaning
Legislative terms defining possessory liens within Chinese civil law grant a creditor the statutory authority to detain a debtor’s movable property already in the creditor’s lawful possession when the debtor fails to perform a due obligation arising from the same legal relationship. Article 447 of the PRC Civil Code establishes the legal basis for manufacturing plants and logistics carriers to hold client inventory or production equipment against unpaid processing fees or freight charges. The lien right applies exclusively to movable assets and ceases once the debtor provides adequate security or satisfies the underlying debt.
Lien Right
Contractual agreements cannot override statutory lien rights unless parties explicitly agree to exclude lien application prior to default. Article 447 of the PRC Civil Code operates automatically upon non-payment without requiring court registration. Creditors hold detained goods as security while demanding settlement within a statutory grace period of at least two months.
Possession Requirement
Lawful initial custody forms the indispensable prerequisite for asserting detention rights over client property. Under article 447 of the PRC Civil Code, property seized through trespass or deception cannot support a valid possessory lien. Possession must remain continuous until debt resolution occurs.
Enforcement Priority
Statutory liens take priority over previously registered mortgages or pledges on the same movable asset under Chinese civil law. Following the notice period established under article 447 of the PRC Civil Code, creditors may auction or sell detained assets to liquidate outstanding balances directly.
