STATUTORY LIENS & RIGHTS OF OFFSET/SETOFF

STATUTORY LIENS & RIGHTS OF OFFSET/SETOFF

Matthew D. Urban August 3, 2022

What is a statutory lien?

? A statutory lien is created by operation of law or statute.

? Example: A mechanics' lien or tax lien are the most commonly known type of statutory lien or child support lien.

? The Federal Credit Union Act, 12 U.S.C. 1757(11), permits a federal credit union to establish a right in or claim to a member's shares and dividends equal to the amount of that member's outstanding financial obligation to the credit union.

What is a statutory lien?

? A lesser known type of statutory lien in Pennsylvania is a judgment lien.

? 231 Pa. Code ?3023: A judgment when entered in the judgment index shall create a lien on real property located in the county, title to which at the time of entry is recorded in the name of the person against whom the judgment is entered.

? 23 Pa. CSA ?4352 also allows overdue child support to act as a judgment lien if proper procedures are followed.

What is a offset/setoff?

? A non statutory right to take possession of the personal property of another in which a relationship between the parties exist.

? The right of setoff (also called "offset") allows entities that owe each other money to apply their mutual debts against each other, thereby avoiding "the absurdity of making A pay B when B owes A." Studley v. Boylson Nat. Bank, 229 U.S. 523, 528

? Pennsylvania recognizes a common law right to offset meaning that there is a right to take said property of another without express language existing in an agreement between parties.

What is a offset/setoff?

? Pennsylvania also recognizes contractual offsets which are created by way of a valid agreement between two parties.

? A common law and contractual right of offset can coexist, meaning that a credit union can rely on either to exercise their rights.

? Pennsylvania has also created a statutory right to offset pursuant to Pa. C.S.A. ?9340 that generally mirrors the common law right.

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