A lien arises whenever a creditor has a security interest in an item of property. Basically, it's a debt that attaches to property and doesn't come off until you either pay it or get rid of it in bankruptcy. In most jurisdictions, court judgments operate as a lien against all real property of the debtor in any county where they're docketed. This extends to property that you've inherited.
How a Judgment Lien Arises
A judgment lien against your real property comes into existence as soon as a creditor obtains a judgment against you in the county where the property is located. If you own real property in another county, the creditor can docket the judgment there, and a lien arises that way. This means that when you sell the property, the creditor gets paid before you do. If the lien is greater than the amount of your equity, you can still sell but you won't receive any proceeds, and the rest of the judgment will still be out there. For this reason, real estate attorneys and closing agents always check the court records to see if you have judgments against you when they're closing a loan.
Property Subject to the Lien
A judgment lien can attach only to property that you presently own. If you're due to inherit a piece of land when a relative dies, the lien doesn't attach until you actually inherit it. The lien also doesn't typically attach to motor vehicles and other personal property. While a judgment creditor can seize personal property to help satisfy a judgment, the fact that he doesn't have a lien on it means you can sell it and keep the money until the creditor figures out a way to get at it. Statutory law such as child support statutes in many states sometimes grants child support creditors a lien on personal property, as well. But if an item of property has no title, enforcing the lien will be nearly impossible.
Who Can Get a Lien
Not every creditor is entitled to a lien on your property. Unless you're facing child support or a governmental entity, your creditor will probably have to go through the lawsuit process and obtain a judgment before he's entitled to touch anything you own. A collection agency usually doesn't have a lien on anything unless it establishes the right to take and sell your property by going through the court system. Until that happens, you're free to do whatever you want with your property regardless of whether you've inherited it or paid for it yourself.
Bankruptcy
Unlike some liens such as purchase-money security interests and tax liens your typical judgment lien doesn't make a creditor a secured party in a bankruptcy proceeding. As such, if you're concerned about a creditor taking an inherited home or other property pursuant to a judgment, you may be able to avoid both the lien and the debt by filing bankruptcy. Talk to a bankruptcy attorney before choosing this course; a bankruptcy court may order your property sold in order to pay your debts, so it might not help you.
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