Can a Creditor Place a Lien on Property Owned with Your Spouse?

• What Happens When a Creditor Gets a Judgment Against Your Spouse?
• Understanding Community Property and Its Impact on Judgment Liens
• How Tenancy by the Entireties Protects Joint Property From Creditors
• Judgment Liens and Common Law/Separate Property States
• Protecting Your Home From Creditors With a Homestead Exemption
• Learn More About Judgment Liens on Joint Properties

The three main types of property ownership and debt-sharing schemes are community property, tenancy by the entireties, and common law. Here's what happens to judgment liens and real property in those situations.

Understanding Community Property and Its Impact on Judgment Liens

If you live in a community property state, you and your spouse legally share almost all property and debts. So, all property you acquire during the marriage (except property you received by gift or inheritance) belongs to both of you, whether the property is titled jointly or separately. This also means that you and your spouse share liability on debts, whether you signed for that debt or were included as a judgment debtor.

So, a judgment creditor of your spouse may be able to file a lien against real property that you jointly own with your spouse. That lien could attach to the entire property. If you own real estate that is titled solely in your name, your spouse's judgment creditor might still be able to file a lien on that property.

Community property states and jurisdictions include: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Puerto Rico, Texas, Washington, and Wisconsin. Some states, like Alaska, allow you to opt into community property by agreement.

Exception to the Community Property Rules Regarding Spousal Debt Liability

Not all community property states will let a creditor file a lien on joint property where only one spouse is a judgment debtor. That will depend on whether your state's community property laws have carved out an exception to making you liable for your spouse's debts. Some community property states provide for sharing of property, but not for sharing of debts.

How Tenancy by the Entireties Protects Joint Property From Creditors

With tenancy by the entirety, you and your spouse have full rights to each other's property. This special type of property ownership is usually only available to legally married couples.

So, if you own real estate jointly with another person who isn't your legal spouse, a judgment lien against the other owner may still attach to that property. Many states allow ownership by tenancy by the entireties, although there might be some limitations on this right. You should research the laws of your state to determine if this right is available to you.

In states that recognize property ownership in the form of tenancy by the entireties, a judgment lien normally doesn't attach to jointly-owned real property at all. The exception to this rule is if the creditor got a judgment against both of you.

Judgment Liens and Common Law/Separate Property States

In common law property states (for the most part, those states that aren't community property states), the debt of each spouse remains a separate liability unless:

• both spouses benefited from the debt, or
• both spouses jointly took out that debt.

Spouses that separate their finances usually aren't responsible for the debt of the other. If the spouses jointly share debts and property, then a creditor may reach that property.

If you own real estate jointly with a spouse in a common law property state (and you don't own the property as tenants by the entirety), then a creditor might be able to put a lien on that property, whether or not you were ever individually liable on that debt. However, the lien only attaches to up to one-half of the value of the real property. This represents your spouse's common law interest in the jointly owned property.

In some states, if you weren't individually liable on the debt, the creditor can't garnish the joint account unless the debt was incurred for the benefit of you and the family, or to acquire joint property.

Protecting Your Home From Creditors With a Homestead Exemption

Notwithstanding whether you live in a community property or common law state, creditors might be unable to execute on the lien because of a homestead exemption. Homestead exemptions are special rights given to homeowners that protect some or all of the value of the property against liens.

Learn More About Judgment Liens on Joint Properties

Laws vary from state to state. To learn more about what happens to jointly owned property if a creditor gets a judgment lien against your spouse, consider talking to a lawyer.