Legal Definitions - partner's lien

A partner's lien is a legal right that allows a partner to use the partnership property to pay off the debts of the partnership. This means that if the partnership owes money to creditors, the partner can use the partnership's assets to pay off those debts.

Additionally, a partner's lien allows a partner to deduct any money owed to the partnership by other partners from their share of the profits. For example, if one partner owes the partnership money, that amount can be deducted from their share of the profits before they receive their payment.

Here's an example: John and Jane are partners in a small business. The business owes $10,000 to a supplier. John has also borrowed $5,000 from the partnership and has not yet paid it back. When the business makes a profit of $20,000, John's share would normally be $10,000 and Jane's share would be $10,000. However, because of the partner's lien, John's $5,000 debt to the partnership would be deducted from his share, leaving him with only $5,000. The remaining $5,000 would be used to pay off the debt to the supplier.

In summary, a partner's lien is a legal right that allows a partner to use the partnership's assets to pay off debts and deduct any money owed to the partnership by other partners from their share of the profits.