How to Place a Lien on Property

If someone owes you a debt, you may be able to place a lien on property that he owns in order to collect the amount that you are owed when the debtor sells the property. Before you can legally place a property lien, however, you must follow certain legal protocol.

Only the U.S. government is permitted to place a lien on property without filing a lawsuit and being awarded a court judgment. Individuals and small businesses do not have this right. Thus, if you want to recover your debt through a property lien, you must sue the debtor in his county court. 

If you win the lawsuit or the debtor fails to show up at the court hearing, you will be awarded an abstract of judgment. You’ll need a formal copy of your abstract of judgment to place a lien on property, but it may take the court up to a week or longer to prepare the necessary documents. Once the documents are prepared, pick up a copy and begin the process of placing the property lien.

State laws vary. While most states will permit you to place a lien against a debtor’s real property (i.e. house, land, etc.) not all states will allow you to place a lien against personal property such as a vehicle. Check your state laws before you begin. In some states, property liens are only a legal collection method for the U.S. government. 

If you decide to place a lien on property the debtor holds in the form of a home or land, you must take your abstract of judgment to the property records office in the county where the debtor resides. Once you file your judgment with the property records office, a property lien will appear on the debtor’s home. If you know for a fact that your debtor owns a home in one county and land in another, you may visit the property records offices for both counties and place a full property lien on both properties. Should the debtor decide to sell either, your property lien will be paid in full and your secondary lien will automatically become invalid. 

Filing a personal property lien is a bit more tricky than a real estate lien. Personal property liens are often filed against vehicles. This is known as a “chattel lien”. In most cases, you will need to provide the county auditor with your abstract of judgment and apply for a certificate of title for the vehicle using your abstract of judgment to become the legal lien holder. This only works if the car is paid off. Should the debtor still be making car payments, a chattel lien is possible, but you will not be able to repossess the vehicle in order to recover the debt.

As with a real estate property lien, a chattel lien only entitles you to payment when the debtor sells the item. Judgment liens don’t last forever, so be sure to check your state regulations regarding the statute of limitations for judgment liens.

Disclaimer: I am not an attorney and this is not to be taken as legal advice. See a licensed attorney in your state for guidance specific to your situation.