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Creditor put lien on an enhanced life estate deed (Lady Bird).

Fenton, MI |

My elderly father put his property into a Enhanced Life Estate Deed (Lady Bird) in April 2012 just after my mother died. In August of 2012, a creditor placed a lien on the property for a debt that my father did not know about. The creditor never served nor sent any papers to my father, however, my father found out about this lien when the courts sent him the final court papers. Can a creditor legally place a lien on a Life Estate Deed, and if so, who is responsible to pay the debt? My father lives in Michigan and the debt in question was in both my parents name.

Attorney Answers 3

Posted

I would say that your answer depends. The creditor probably cannot unilaterally place a lien on the property. But if the creditor obtained a judgment against your parents, then a lien would be one of the available remedies. More information is needed and you should consult an attorney in order to determine how best to proceed.

James Frederick

***Please be sure to mark if you find the answer "helpful" or a "best" answer. Thank you! I hope this helps. ***************************************** LEGAL DISCLAIMER I am licensed to practice law in the State of Michigan and have offices in Wayne and Ingham Counties. My practice is focused in the areas of estate planning and probate administration. I am ethically required to state that the above answer does not create an attorney/client relationship. These responses should be considered general legal education and are intended to provide general information about the question asked. Frequently, the question does not include important facts that, if known, could significantly change the answer. Information provided on this site should not be used as a substitute for competent legal advice from a licensed attorney that practices in your state. The law changes frequently and varies from state to state. If I refer to your state's laws, you should not rely on what I say; I just did a quick Internet search and found something that looked relevant that I hoped you would find helpful. You should verify and confirm any information provided with an attorney licensed in your state. I hope you our answer helpful!

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Asker

Posted

Since my parents were tenants in the entirety, their property ownership should be immune to collection by creditors if one of the spouses is not a party to the loan or debt that incurred by the other spouse, right?

James P. Frederick

James P. Frederick

Posted

Yes. The TBE status does not change as a result of the lady bird deed.

Posted

You haven't given enough detail for a coherent answer, but the nature of your situation seems to complicated for any easy answer. This is not one of the questions that can be answered in generalities. You really need to consult with someone with specific facts and circumstances, and I highly encourage it.

This reply is for general information and educational purposes only applies to Michigan law only and should not be relied upon as creating an attorney-client relationship or as legal advice by a lawyer to a client unless and until the questioner and an attorney have entered into a written attorney-client relationship pursuant to the terms of a signed engagement letter specifying, among other matters, the scope of the engagement and the attorney's billing rates and procedures .

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Posted

A lien is not placed on a deed. A lien is placed on a parcel of property and is recorded in the chain of title. Moreover, a life estate deed is revocable by the grantor (your father).

Whether the lien is legitimate or not the title to your father's property is now clouded by this lien and is therefore unmarketable by definition of the Michigan Marketable Title Act. There are various types of liens, mortgage, construction, homeowner's association, judgment, state and federal tax lien, and special assessments...I may have forgot some but that is about it. There are also various liens that may have no legitimacy whatsoever.

However, what you described sounds like a judgment lien. A judgment lien is a court order money judgment and cannot be foreclosed out...but a judgment lien has priority over other various liens and the judgment lienholder is in line to get paid off when your father decides to sell the property.

You therefore have two options. One, payoff the lien or work out a settlement. Two, file a slander of title action or quiet title action if you think the lien is not legitimate. But, if it is court ordered, it is legitimate.

Nevertheless, you should seek counsel to help you navigate this process. I can be reached at 248-270-2709 if you would like a low cost solution.

*The answer to this question does not constitute legal advice nor does create a client relationship with the attorney answering this question. For more specific advice regarding your situation, please consult an attorney*

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Asker

Posted

Thank you for responding. I truly appreciate it. I have more information about what is going on with my father and what transpired, so here is the complications with this dilemma. To be clear, my mother and father had a "Lady Bird" (Enhanced Life Estate Deed) on the property. The "Lady Bird" was in place prior to the lien being placed on property. The lien is only in my father's name-not my mothers, therefore, if I am correct in my assumption, the lien should not have ever been placed on the property due to the tenancy of entirety law. Furthermore, with their home being their "Homestead," the homestead exemption should also protect their property from creditors in much the same way it protects property in Chapter 7 bankruptcy, correct? Also, as far as we know, we have tried to reach the debt collector in question who put the lien on the property, but they no longer exist. We cannot get any information on them nor can we contact them. I have researched this debt collector and I found that they had extremely inappropriate conduct with all of their dealings. To date, we have no idea what the debt/lien is for, and it is for a large amount ($27,000.00). I believe it may have been a credit card (??). I would appreciate any response you could give me on this matter. Thank you again for responding.

Daniel Joseph Marchese

Daniel Joseph Marchese

Posted

You are welcome - sorry you are having this problem. The way you put it, the life estate granted through the so called lady bird deed is not fee simple title held by tenancies by the entireties (TBE) and thus the TBE protections would not apply. Further, the homestead exemption does not provide creditor protection and does not have automatic stay protections of bankruptcy. Lastly, it does not matter whether the lien should or should not have been placed on the property...if its there its there and now its a cloud on title. If you cannot find the creditor then an action to clear title would be simple. There are other questions I have that go beyond what I am willing to provide in this forum and I would need to speak with you in the confidence of an attorney client relationship to help you further.

Asker

Posted

Thank you again for responding. I will be getting in touch with you (hopefully tomorrow). Again, thank you so much for your expertise, your patience, your advice and your time.

Daniel Joseph Marchese

Daniel Joseph Marchese

Posted

My mistake on the TBE analysis. The TBE would still apply to the life estate interest as Attorney James stated. I was confused about a caveat.

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