The city can definitely place a lien. As to whether they can seize your property in satisfaction of that lien, it depends on how the title was written and how the property is owned, and the terms of your mortgage. I can't really give you more than that without seeing the deed and the mortgage documents.
A lien is a claim on an asset for money owed. You owe the money, you have the asset. They have the power to make a claim. What we don't know, without seeing more, is whether they can enforce the claim before you sell the house. They can always make their attempt to collect on sale of the property by attaching the proceeds, once the mortgage is satisfied. The mortgage always comes first.
Also, it depends on how you and your wife maintain your finances. If you can show complete separation, separate accounts, a number of separate asset holdings, etc., you might be able to make a case that you really do own separate interests in the property. However, that's a tough thing to prove for a married couple, as there is a presumption that a married couple with both names on the deed and both living on the property have certain types of joint ownership.
If you require actual legal representation, I do handle this sort of thing, or there are plenty of others who do as well.
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