A lien is a specific claim against certain property of the debtor. It is a legal claim that changes a general court judgment against the debtor into a specific claim. If the debtor sells or refinances the property you have attached a lien to, you can be paid out the proceeds. Liens are usually attached to property that often changes hands or is refinanced. It often produces enough cash to pay you the judgment with post-judgment costs and interest. The down part is that it takes a couple of years for you to get paid. Can a Lien be Created on Real Estate
A lien can be created on any real estate by registering your judgment with the land records office in the county in which the debtor?s real state is located. What Should I Look Out for before Placing a Lien?
You also want to check if other creditors have placed liens on the property, or you may find yourself at the end of a very long line and may even get nothing in the end. If there are other liens on the property, you can still place the lien but you should also pursue other strategies in trying to get your money. Can the Property be Transferred without Removing the Liens?
A lien doesn?t have to be removed before the property is transferred. The lien simply remains on the property and the new owner of the specific property has to deal with it. If the new owner wants to transfer the property to someone who wants a clear title, the lien has to be paid off. Are There any Limits on Real Estate Liens?
When the owner sells the real estate you will get paid off if there is sufficient money after the mortgage lender and other liens ahead of are paid. There are a couple of limits on your right as a real estate liens holder: - If the owner falls behind on his/her mortgage payments and the mortgage lender forecloses on the property, your chances on collecting on the lien are low. A foreclosure sale rarely brings in more than paying off the mortgage lender.
- If your lien is attached to the debtor?s home, there is another potential limitation. In most states there is a law, called a homestead, which provides homeowners with the right to exempt an amount from being collected of the equity in their home. This amount is from $7,500 to an unlimited amount depending on the state. This exemption only applies to a forced sale of the debtor?s home.
- If the debtor declares bankruptcy you?ll face another possible limitation. A debtor can use something called ?a lien avoidance?. It allows a debtor to completely wipe out a lien. This is possible on liens that cut into the debtor?s homestead exemption after the mortgage has been withdrawn.
What about Jointly Owned Property?
To find out what forms of ownership your judgment debtor has of his/her real estate, you can check the deed in the county recorder?s office. If the deed doesn?t specify a particular type of joint ownership, property is seen as a tenancy in common. In jointly owned real estate, a lien works differently depending on the form of joint ownership: - Joint tenancy ? The lien attaches to the debtor?s share of the joint tenancy, and it?s enforceable if this share is transferred. If the debtor dies your lien is not valid anymore. Joint tenancy rules state that a lien attached to a share is extinguished by that debtor?s death.
- Community property ? This can also be called tenancy by the entirety and a lien attaches to the entire property when it?s held by married couples. The lien stays attached to the property if it?s transferred.
- Tenancy in common ? A lien here is attached to the debtor?s particular interest. The lien remains attached even if the debtor transfers, or leaves in a will, his/her ownership to someone else.
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