Call Today For A Free Consultation

Understanding judgment liens

On Behalf of | Jun 21, 2024 | Real Estate |

When an individual acquires real estate or property, they are expected to make monthly mortgage payments to the bank until they fully own the property. If any issues arise and the debtor fails to make payments, the creditor has the right to seek a lien on the debtor’s property.

Property liens on real estate often prevent the owner from selling the property until the outstanding debt is resolved and the lien is removed. This enables a creditor to assert ownership over the property. If the debtor fails to meet the payment obligations, the creditor can sell the property to recover their financial loss. A judgment lien extends its reach to encompass all properties the debtor owns. 

Can a debtor contest a judgment lien?

Judgment liens accrue interest over time, resulting in an increased debt compared to the original amount. Debtors unable to repay the lien may explore alternatives to have it eliminated. These include:

  • Contesting the lien. If the debtor believes that a lien is incorrect, they have the right to contest it. Likewise, as the creditor, if you disagree with the removal of the lien, you may need to take legal action against the debtor.
  • Paying off the debt. Depending on your company’s regulations, you may choose to allow the debtor to propose a financial settlement. This would enable the creditor to recoup a portion of their financial loss.
  • Rectify the lien. If the individual who owes the debt purchased the property and the lien that is connected to it is from a prior court decision, they have the right to formally ask the creditor to remove the lien.

Liens can be extremely challenging to manage, often leading to significant financial difficulties for property buyers and proving difficult to remove. Therefore, If you opt to place a lien on a debtor’s property, it is important to seek assistance with the process.