Q: I have a lien on my neighbor’s home due to damages awarded to me from the courts. Their home is now in foreclosure and I received the notice of sale. Is there any way I can protect the lien amount or as the home is in foreclosure will I lose it?
A: There are ways to protect your lien but that protection will not guarantee that you will get any money in return. When you sued your neighbor and received a judgment from the court, you placed a lien on your neighbor’s home. That lien gave you the right to sell the home to satisfy the judgment.
At the same time, your neighbor’s lender has a lien on the home and the neighbor may have failed to pay his monthly payments to the lender. Now that lender is trying to sell the home to satisfy the debt owed to the lender.
If you do nothing, the lien on your neighbor’s home will be wiped out. The lien is lost but not your judgment against the neighbor. You could still go after other assets owned by your neighbor. In some states, you could have found out where your neighbor worked and garnished his wages. That is, have your neighbor pay you a bit at a time as he was paid.
To protect your lien, you would have to follow the procedures dictated by your state’s laws. In some states, you must join in the litigation with the other lender or participate in the manner required by your state laws. By joining in the litigation, you may receive money from the sale of the home once the other lender is paid in full. If your neighbor owes his other lender far more that what his home is worth, it may be unlikely that you can recover any money from the sale of the home.
If you decide to participate in the foreclosure proceedings, you may want to hire an attorney to work with you through the process.
Dec. 30, 2008.