How to Foreclose With a Lien

A property lien is a viable option for most creditors to collect debts from borrowers who own a home or land. When you file a property lien, you are establishing your legal right to a portion of the property's value. Therefore, when the borrower attempts to sell the home, he will not receive any proceeds from the sale until you and any other lienholders have been paid. The downside to this arrangement is that you may have to wait a long time for the debtor to sell the home--if he chooses to sell at all. In some cases, however, you may be able to use your lien to foreclose on the property and collect the debt much faster.

Instructions

1

Check your state laws to ensure that private creditors are legally able to foreclose on a property to collect on a lien. Some states do not permit this.

2

Sue the debtor for the unpaid debt. If the debtor loses the lawsuit or does not appear in court, you will be awarded a judgment. The judgment is necessary to file the lien. You must win your case in order to proceed.

3

Obtain a copy of the judgment from the court. Depending on your state, you may be required to file the judgment at the land records office in the debtor's county or with the state to create a property lien.

4

Return to the courthouse that originally issued the judgment. Provide the court clerk with a copy of the judgment and request that she issue a writ of execution. The writ of execution can be used to force the debtor to sell his property to pay a lienholder.

5

Request an "instructions for levy" form from the clerk. This is a formal instruction to the sheriff to seize the debtor's property (in some counties, these instructions will be a part of the writ of execution). You will need to fill out the details of the judgment and the property's address. You may also provide a description of the property.

6

Deliver the writ of execution and the instructions for levy to the sheriff. You will also need to pay the sheriff's fees for executing the lien foreclosure, which vary by state. Once the writ of execution has been delivered, the court will set a date for the foreclosure sale.

7

Check with your state to find out whether there are any other outstanding liens or security interests on the debtor's property. If there are, you are legally obligated to notify each creditor of the date and time of the impending sale.

8

Attend the foreclosure auction and, if it is successful, recover the amount you are owed.