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Liens Held by a Lessor

In the normal course of business, many entities enter into a lease that has a clause that allows the lessor to hold a priority over other claims, most typically to insure the payment of rent or leasehold obligations. Accounts receivable, furniture, equipment, inventory and other assets can be included in the lessors security interest.

It is possible for a business owner to enter into a lease agreement with a friendly party to utilize this common lien provision because it could easily appear that there was no intentional Asset Protection scheme.

Also, the sale of a business to a friendly party with a leaseback provision is an effective way to protect one piece of property by titling it to a separate entity than that which leases the business back.

One example would be an LLC that sold an office building to a second LLC, leased the building back to the first LLC and subsequently placed a lessor's lien on the first LLC's accounts receivable.

Major consideration must be given to lawful transfer and transactions to withstand a court challenge, but with proper legal guidance and expertise it is possible to shield any business from the risk of a creditor claim and operate with optimal protection from the host of threats that every business faces in its day-to-day activities.


The best defense is a good offense.