Short answer. Under Article 1529 of the Civil Code, an unpaid seller loses his lien on goods in three ways: by delivering the goods to a carrier without reserving ownership or possession, by allowing the buyer to lawfully obtain possession, or by expressly or impliedly waiving the lien. Obtaining a court judgment for the price alone does not extinguish it.
What the law says
The unpaid seller of goods loses his lien thereon: (1) When he delivers the goods to a carrier or other bailee for the purpose of transmission to the buyer without reserving the ownership in the goods or the right to the possession thereof; (2) When the buyer or his agent lawfully obtains possession of the goods; (3) By waiver thereof. The unpaid seller of goods, having a lien thereon, does not lose his lien by reason only that he has obtained judgment or decree for the price of the goods.
Civil Code, Article 1529 — Loss of the Lien. Read the full provision →
The three ways the lien is lost
Article 1529 of the Civil Code sets out a closed list of ways an unpaid seller's lien is extinguished: "The unpaid seller of goods loses his lien thereon: (1) When he delivers the goods to a carrier or other bailee for the purpose of transmission to the buyer without reserving the ownership in the goods or the right to the possession thereof; (2) When the buyer or his agent lawfully obtains possession of the goods; (3) By waiver thereof." Each ground reflects a different way the seller parts with control over the goods, voluntarily or otherwise.
Delivery to a carrier without a reservation
The first ground applies when the seller hands the goods to a carrier or other bailee for shipment to the buyer, but does so without reserving any right over the goods — no reservation of ownership, no reservation of the right to possession. In that situation, the seller has effectively yielded control of the goods and the lien cannot survive. The important word is without reserving: if the seller explicitly reserves the right of disposal or ownership in the shipping documents, the lien and related rights remain intact even after the goods are in transit.
Lawful possession by the buyer
The second ground is straightforward: once the buyer or the buyer's agent lawfully takes possession of the goods, the seller's lien dissolves. The lien is essentially a right to withhold delivery as security for payment, and it ceases to have an object the moment the goods are no longer in the seller's possession or control. Note the word lawfully: if the buyer obtained possession through fraud or without the seller's consent, the seller may still have remedies — the statute does not deprive a seller of all recourse when the buyer takes goods improperly.
Waiver — and what does not constitute waiver
The third ground is waiver, which may be express or implied from conduct. A seller who accepts a partial payment and agrees to release the goods without any further security may be found to have waived the lien. Article 1529 then adds an important clarification: "The unpaid seller of goods, having a lien thereon, does not lose his lien by reason only that he has obtained judgment or decree for the price of the goods." Getting a court judgment for the unpaid amount is not, by itself, a waiver or extinguishment of the lien. The two remedies can coexist — the seller may pursue a judgment and still hold the goods until the price is actually paid.