A creditor lends money to another party, expecting the party, who assumes the debt, to pay them back in full and even with interest after a significant amount of time. However, the debtor does not always fulfill their promise to return the debt, especially when they have limited resources and nonliquid assets, such as real property.
A property lien is the creditor’s right or legal claim on the debtor’s property for the payment of debt. The lien is not the actual payment of the debt. Instead, it prevents the debtor from profiting from the sale of their property until they pay the creditor back.
How can a creditor obtain a property lien?
A creditor can file a certificate of judgment to obtain a lien on the debtor’s property. They can file it with the clerk of the Court of Common Pleas. The type of property lien the creditor will obtain through this process is a judgment lien. A judgment lien in Ohio is only attachable to real property, including land, houses, condominiums and similar property interests. The lien will remain in effect for five years.
How does a property lien ensure the debtor repays the debt?
A debtor who needs to settle different sources of debt may attempt to liquidate their real property. A lien places a legal claim against the property on public record. If any interested party conducts a title search and discovers that the property is subject to a lien, the search will reveal a defective title, and any real estate transaction cannot transpire unless they can clear the title. The judgment lien will prevent the debtor from transferring ownership of the title to the buyer until the proceeds from the sale satisfy the lien claims.
