Can Collection Agency Place a Lien Against Property With More Than One Owner?

Let's face it, real estate is expensive. Because of this, many people opt to purchase real estate with their spouse or another family member. Homeowners can also set up their real estate for "joint tenancy." This allows the property to pass directly to the co-owner without passing through probate. Unfortunately, having a co-owner doesn't protect you from collection agency liens.

You bought it together, but is it safe?

Collection Agency Property Liens

A collection agency has the ability to place a lien against property you own by suing you in court for a debt and winning. This gives the company a judgment they can use to attach a lien to your property. Should you sell the property with the lien still in effect, the proceeds from the sale go toward paying off the lien before you ever see a dime. If you have sufficient equity in the property and the collector's judgment is for a sizeable amount, it may even opt to force the sale of your property through foreclosure.



Read More: What Happens If a Collection Agency Sues You and Wins?

Joint Property Owners and Collection Liens

When a collection agency files a lien against a property with more than one owner, the lien attaches only to the debtor's share of the property. The co-owner is not legally responsible for the other owner's debts. Nor is he/she responsible for paying off the lien. If the debtor dies before the collection agency attaches a lien to the home, property ownership passes immediately to the surviving owner and the collection agency loses its right to attach a lien--since the new owner isn't responsible for the debt. If the collection agency attaches the lien prior to the co-owner's death, however, the surviving property owner inherits the lien along with the property.

Tenancy By the Entireties and Judgment Liens 

Unlike joint tenancy, if two co-owners hold property in tenancy by the entireties, both individuals have a legal claim to 100% of the house. Tenancy by the entirety can only be held by spouses, but it provides your home with valuable protection in the face of aggressive bill collectors. Generally, debt collectors cannot collect

Tenancy by the entirety only available to married couples
Photo credit: Ben Earwicker

from your spouse. You are the one who incurred the debt thus you are the one they must collect from. In the case of tenancy by the entireties, attaching a lien to the property would hinder the rights of a spouse who did not incur the debt. Thus, if you and your spouse hold property in this manner, collectors can't typically attach a property lien and then take it.

Read More: Can a Collection Agency Put a Lien on Your House or Car?

The exception to the rule comes into play if you happen to live in a community property state. In a community property state, if you and your spouse were married when you incurred the original debt, she/he is just as liable for the debt as you are. Because your spouse is also liable, tenancy by entirety would not protect your home from a collection agency's judgment lien.