Can a Creditor Put a Lien on My House?
This information is for people with low home values who want to know if someone can put a lien on their house for an unpaid debt.
First, as a general rule, the creditor must get a court judgment against you. In other words, a court must determine that you actually owe the money and that the creditor has the right to try to collect that money from you.
A creditor with a court judgment has several legal tools for trying to "collect on the judgment." These include wage withholdings and bank account garnishments. Read more here.
Another legal tool is to put a lien on your house. Usually, this means that the creditor is claiming his right to a portion of the value, which he will collect if and when your house is sold. Generally, a "judgment creditor" has the right to do this. But where your financial interest in the house is a low amount, your interest is protected. So a creditor is not allowed to place a lien on your house.
Here is the basic rule. Your equity in your home up to $47,500 is protected. This exemption increases to $95,000 if:
- a minor dependant lives with you, or
- you or are at least 60 years old or disabled, or
- you have a dependant who is at least 60 years old or disabled.
Your "equity" is the value of your home, minus the debt you owe on it.
NOTE: If you own your home with someone else, your exemption is based on how much of the property you own. For example, if you own the property with 2 other people, you own 1/3 of the property. Your share of the exemption if you are disabled or elderly would be $190,000 X 1/3 or $63,333. If you are not elderly or disabled, your exemption would be $95,000 X 1/3 or $31,667. You can see that the total exemption for joint owners is doubled, with each owner claiming a proportional share of the total, based on how the shares are proportioned in the deed.
We have prepared the attached form: Request to Discharge Execution on Real Property. Read the statute at the end of the form. If you believe that you qualify for the protection, you can fill out the form. You will need to attach to the form reliable evidence of the value of your property and any amount you owe on the property. Then make a copy of the form, with the attachments. Keep your copy in a safe place. Deliver the original to the person or company who placed the lien on your house. To make sure you have a record that your letter was received by the right person, send it certified mail, asking for "return receipt" and "restricted delivery."
If the lien is not removed within 15 days, you can ask a court to order that the lien be lifted. A creditor who loses such a law suit must pay court costs and your attorneys fees.