Judgment Liens and Homestead Property

Judgment liens can negatively affect your ability to refinance or sell your home, even if your home has homestead protection. If you refinance or enter a contract to sell your property and a judgment lien is discovered, the process to clear the lien may delay or prevent the closing.

There are four options to clear a judgment lien from title when selling your homestead property. Which option will work to clear the judgment lien depends on the type and amount of the judgment lien.

1. Owner’s affidavit – this is an affidavit where the owner swears under oath that the property is homestead and therefore the judgment lien is not attached to the property. This option typically only works for lower dollar amount judgment liens.
   
   
2. Notice of homestead – this a notice that is recorded in the public record that describes the property and declares that it is homestead. A copy of the notice is sent to the owner’s judgment creditors. Creditors will have 45 days to determine whether your property is homestead. If creditors take no action, the owner can sell/refinance the homestead within 180 days of filing the notice of homestead.
   
   
3. Partial release from judgment lien – this is a form that the creditor will need to sign partially releasing the owner’s property from the judgment lien. An authorized signor of the creditor will need to sign, preferably an owner, CEO, President, etc. The form identifies the judgment, the homestead property, and releases the judgment against the homestead property.
   
   
4. Court Order – If the judgment lien is too large, then a court order stating the property is homestead and the judgment liens do not attach might be the only option. The creditor will need to be sued. The purpose of the lawsuit will be to obtain a court order stating that the property is homestead and the judgment does not attach.
   
   

Which option you can use to clear your judgment lien from your homestead property depends on the amount of the judgment lien and the type of lien. It should be noted that releasing the lien from the homestead property will not eliminate the lien, it will only allow the property to be sold/refinanced.