Judgment liens are tools that creditors use to make debtors pay what they owe. If you and your spouse share ownership of your house, it may seem unfair that a creditor could attach a lien to the house for your spouse's debts. In many states, however, it's perfectly legal to do this.
To place a lien on your property, a creditor must first sue you or your spouse for a court decision -- a judgment -- that you owe the money. The creditor can then file the judgment with the county holding your property, creating the lien. Creditors don't have to foreclose to get paid: It's almost impossible to sell property with a lien already on it, so your creditor may simply wait until you want to sell or refinance rather than spending money on a foreclosure.
The vulnerability of your assets to your spouse's debts depends, in part, on which state you reside in. Most states use a common-law standard under which your property is separate from your spouse's unless you buy it together: If you alone bought the house and signed for the mortgage, it's separate property, not marital property. In the minority of states that apply a community property standard, your spouse would automatically be a half-owner if you bought the house while married. If the house is community property, your creditors can file a lien on it.
Another difference between community property and common law states is spouses' responsibilities for each other's debts. In community property states, debts incurred during marriage are jointly owed, regardless of which spouse took out the loan. In common law states, debts are only joint if they were incurred to benefit the couple, or if both spouses sign for them. Creditors can file against the entire community property for joint debts; if it's a separate debt, incurred before you married, they can file a lien, but only on the spouse's half.
If you and your spouse divorce, dividing up debts can be as complicated as dividing up property. There have been cases where a creditor files a lien on community property for one spouse's debt, but the other spouse acquired the property in the divorce settlement and the lien along with it. In other divorce cases, the judge may require the spouse responsible for the debt to settle the lien. Some divorces can lead to liens on non-marital property -- for example, as a way to ensure one spouse pays child support.
- Nolo: Collect Your Court Judgment With a Real Estate Lien
- Nolo: Separate and Community Property During Marriage -- Who Owns What?
- Nolo; Debt and Marriage -- When Do I Owe My Spouse's Debts?; Bethany K. Laurence
- Daily Development; Marital Property: Debts of One Spouse; Patrick A. Randolph, Jr.; October 1995
- Internal Revenue Service. "Understanding a Federal Tax Lien." Accessed Sep. 18, 2020.
- Experian. "Tax Liens Are No Longer a Part of Credit Reports." Accessed Sept. 18, 2020.
- Experian. "What Affects Your Credit Scores?" Accessed Sep. 18, 2020.
- Federal Trade Commission. "Fair Credit Reporting Act 15 U.S.C § 1681," Page 22. Accessed Sep. 18, 2020.
A graduate of Oberlin College, Fraser Sherman began writing in 1981. Since then he's researched and written newspaper and magazine stories on city government, court cases, business, real estate and finance, the uses of new technologies and film history. Sherman has worked for more than a decade as a newspaper reporter, and his magazine articles have been published in "Newsweek," "Air & Space," "Backpacker" and "Boys' Life." Sherman is also the author of three film reference books, with a fourth currently under way.