I fell on hard financial times a few years ago and was sued by the issuer of one of the credit cards I had at the time. A judgment was entered against me and now the credit card issuer has used that judgment to create a lien against my Texas homestead. What should I do?
It can be very difficult to collect a judgment against a Texas resident. Two primary reasons for this difficulty is that both homesteads are exempt from forced sale for purposes of paying debts and judgments, except in cases of purchase money loans, ad valorem taxes, home improvement loans, home equity loans, reverse mortgages, and divorce. See, Texas Constitution, Art. XVI, § 50 and the Texas Property Code. Wages are also exempt “from garnishment, attachment, execution, and other seizure.” Texas Property Code, § 42.001(b)(1).
The key to your question is that the property must be your homestead in order to be exempt.
A lien that is recorded against real property – even an invalid lien – may result in escrow companies refusing to facilitate a transfer of title to the property until the lien is released and might also result in title insurance companies refusing to issue a policy of title insurance until the lien is released.
Texas courts recognize that, even though a property is exempt under the homestead laws, a judgment lien against the property may nonetheless create a cloud on title. Tarrant Bank v. Mark B. Miller, et al., 833 S.W.2d 666 (Tex.App. – Eastland 1992).
The Texas Property Code, however, provides a remedy. Assuming that the real property qualifies as a judgment debtor’s homestead and assuming certain proper procedures are followed, the judgment debtor may file an affidavit that will effectuate a release of the lien. See, Texas Property Code § 52.0012.
Even though the lien release procedure may seem fairly straight-forward, the assistance of counsel should be utilized when using this remedy, as failure to follow proper procedure could result not only in an ineffective attempt to obtain a release, but also further litigation initiated by the judgment creditor.
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