Some liens are consensual, like home mortgages and the lien you give your lender when you buy a car. However, if someone owes you money and you want to lien their property, you'll need to sue him and get a money judgment. Collecting on the lien may take time, as it's not usually practical to seize the property. The court judgment usually goes on the debtor's credit record, which can create an added pressure for her to make good.
TL;DR (Too Long; Didn't Read)
You may be able to get a judgment lien against someone's property if you sue him for money he owes you and wins. State laws vary about how to get a judgment lien and what the lien attaches to; in some states, the lien is automatic, while in others, you have to take steps to file the judgment with the state or county.
Filing a Complaint
Start the ball rolling by filing a complaint with a state civil court or local small claims court. The complaint says the debtor owes you money and won't pay. You can obtain the paperwork and instructions from the courthouse, or possibly the court website. You then "serve" the debtor, delivering a copy of the paperwork to him. The clerk of court can tell you the local rules for proper service. Follow them exactly or your case could be thrown out. Small claims courts are cheaper, as they don't use lawyers. However, there's a limit to how big a sum you can ask for.
Proving Your Case
When the court hearing rolls around, your lawyer – or you, if you're going without an attorney – presents evidence to the judge. To get a judgment, you have to show proof that the defendant owes you money and hasn't paid. If she doesn't respond to your filing or attend the hearing, you can probably get a default judgment in your favor. If the defendant appears and presents counter-arguments – the money was a gift, not a loan, say – the judge will decide which of you to believe.
Recording the Lien
Every state is different when it comes to how to record a judgment lien. In Pennsylvania, for example, a money judgment automatically creates a lien on any real estate owned by the debtor in the county where the suit was filed. If the debtor lives in a different county, you'll need to transfer the judgment to that county through that county's court. In New Jersey, on the other hand, a judgment must be docketed in the capitol and given a judgment number; once that happens, the lien is on all real estate owned by the debtor statewide. Talk to an attorney about the laws in your state for perfecting a judgment lien.
Judgments will also permit you to collect against other property of the debtor, like bank accounts and other personalty, but the laws on that also vary.
Getting Paid on the Judgment Lien
Once the lien is on the property, it clouds title and therefore must be paid before the property can be sold unless the debtor took some action to remove it, i.e., through a bankruptcy. If the house also has a mortgage on it as well as tax liens, those will get paid before the judgment creditor. If the mortgage company forecloses, depending upon state law, you may not get paid at all. Some states will allow you to foreclose upon or otherwise sell the property, but any senior liens like mortgages would have to be paid first.
Renew the lien from time to time, if you have to. State laws set limits on how long judgment liens last. If you don't renew, the lien expires and your debtor may be able to sell the property without paying you.
- Experian: Small Claims Judgments Reported to Credit Bureaus
- Nolo: Collecting From a Judgment Debtor
- Nolo: What Is a Judgment Lien?
- New Jersey Courts: Statewide Judgment Processing Services
- Burnstein Burkley: Maintaining Lien Priority After Obtaining a Judgment is Incredibly Easy but Should not be Overlooked