Can a collection agency lien a home that is owned free and clear?

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Can a collection agency lien a home that is owned free and clear?

Asked on May 4, 2012 under Bankruptcy Law, Ohio

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Actually, it's homes owned free and clear, not ones mortgaged (and especially not ones underwater on their mortgages) that are best to lien to secure payment.  A lien is a mechanism to make sure a court judgment is paid; to put a lien on property, the alleged creditor must sue the purported debtor and win, getting a judgment. If the judgment is not paid, the creditor can then ask the cour to put a lien on any real property, including a home, owned by the debtor. The property does not need to have any connection to the debt or cause of action--it just needs to be owned by the debtor. The debtor cannot sell the house without paying off the lien. The reason it is best to lien an othewise encumbered home is that a mortgage would have a higher "priority" and be paid first when the house is sold, so it's possible there would not be enough money in the sale to pay both the mortgage and the lien, leaving the lien unsatisfied.


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