[thomasdcurtis]

I have a cognovit note for 56K+ from a person I sold 2 properties. He has not been making payments timely and I am interested in place a lien on his home for the amount owed. What is involved in doing this?

[ScottGem]

Were the properties used as collateral for the note? Is his home one of those properties?

You cannot place a lien against his home for a secured debt that is secured by other collateral. If the note is not secured, then you will need to file suit and obtain a judgment to place a lien.

[thomasdcurtis]

Yes, the 2 properties were initially used as collateral for the note. His home is not one of the properties. Though the properties were the basis for the note, I agreed to give him clear title for both properties in turn for the cognovit note. So, as it stands now, I have a cognovit note for the amount owing. My main concern is this investor owns upwards of 50 properties. With the economy and the housing/rental market being in the dumper, he may be forced to file bankruptcy at some point. I am looking for a way to better secure my loan. Would securing a lien against his own residence, place me in a more secure situation if he were to file bankruptcy?

[ScottGem]

The laws on cognovit notes vary by state. Basically the signer has waived his right to a trial and gives you the equivalent of a judgment without the need to file suit.

The problem is a cognovit note is a fairly rare and obscure legal document. Since the laws on them vary, I can't be sure if you can use it to place a lien on personal property. I think you need to consult an attorney familiar with this type of note.

[thomasdcurtis]

Thank you Scott. Greatly appreciated. TC