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Real Estate Expert
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Category: Real Estate Law
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Experience:  Specialize in all phases of commerical and residential real estate transactions
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What does it mean when a lien is put on your house

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What does it mean when a lien is put on your house? What type of incorporation can protect your house against a lien? Can you put your house under a non-profit incorporation? I am asking these questions because I was in a very minut parking lot accident where we both backed up into each other. We both have Mercury insurance who unfortunately found me most at fault. She is a high profile person and claiming she was majorly injured to her shoulder needing surgery. The impact was very low and on the soft spot of the back rear door. Mercury from the beginning as did I believe there was fraud. She initially went for acupuncture treatments. They tried to settle with her and she came up with the new shoulder injury. She will not give prior health records. Now they want me to be prepared for they say the remote possibility of being in need of umbrella insurance, which I do not have. My sister told me that they could put a lien on my house, but it could be protected if incorporated-please help.
Submitted: 8 years ago.
Category: Real Estate Law
Expert:  Real Estate Expert replied 8 years ago.


A lien on real property may also result from a debt of the property owner that is not directly connected to the ownership of the land. If a debtor owner fails to pay a debt, and the creditor goes to court and obtains a judgment, the law usually permits the creditor to file that judgment in the land records so that it becomes a lien on the debtor's real property. If the debtor sells the property without satisfying the lien, the lien isn't discharged and it may still be satisfied by a sale of the property, even after it's been sold to a new owner. In most transactions, a bank or other mortgage lender will not provide mortgage financing until all liens on the property have been removed. If a judgment is obtained against you and filed in any county in which you own real estate, all real estate in that county will have a lien attached to it. You cannot sell or refinance any property in that county, since no title insurance company will guarantee a clean title. You're stuck until you pay off the lien.

Some people use a corporation or limited liability company to hold title to their real estate. While these entities will protect you, they will not protect your property. If you own all of your properties in one corporation, a judgment against the corporation will create a lien on all property owned by the corporation. Furthermore, the directors and officers of a corporation are public record, so a corporation will not hide your ownership.

The solution for holding title to real estate is a land trust. A land trust is a revocable, living trust used to title ownership of real estate. Title to the property is held in the name of a trustee, who is forbidden to reveal the beneficial owner. The beneficial owner or "beneficiary" can be an individual, corporation or other entity for further protection. A land trust, if properly setup and implemented, will hide your name from the public records. No one will know who owns the property but you, your attorney and the trustee. If a judgment is entered against you, a lien will not automatically attach to the property, since title is not in your name.

In order for this lady to put a lien on your house she would have to get a court judgment for the amount of the lien. She would essentially have to sue you in court for the accident. I would try talking to her and see if she is will to work out something reasonable for the accident.

Please let me know if you have any other questions, or require clarification of this matter. Otherwise please hit "ACCEPT", so I may receive credit for my response. Thank you.


Customer: replied 8 years ago.
You indicated that a beneficiary can be a corporation could this be one of my own, such as non-profit or another type, should I set up 2. I am single, make a decent living as a professional, but have very little resources or assets. I am also clergy and was already looking to become incorprated. i do not have a trustee who i could trust. How do I set up a incorporation and land trust?
Expert:  Real Estate Expert replied 8 years ago.

Sorry for taking so long to get back to you, I was unable to respond to your question because it got put in a category I was not authorized to answer but now the problem has been fixed.

Yes the beneficiary can be a corporation of your own. You do not even need to have to set up a corporation. You can be the beneficiary yourself. When someone searches the property it will come up in the trustee's name.

You should hire a local attorney to set up a land trust for you property and discuss all the issue with you about incorporating if you decide to go that route.

Please let me know if you have any other questions, or require clarification of this matter. Otherwise please hit "ACCEPT", so I may receive credit for my response. Thank you.

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