Owning property with someone else—whether it’s a spouse, relative, or business partner—can raise some unexpected legal questions, especially when debt is involved. One of the most common concerns people ask is: can a creditor take property that is jointly owned?
The short answer: sometimes, yes—but not always. In this article, we’ll break down how joint ownership works in the eyes of debt collectors, what your rights are, and how you can protect your assets from being caught in someone else’s financial troubles.
—
Understanding Joint Ownership and Debt Responsibility
Before worrying about creditors, it’s essential to know how your property is structured. The legal classification of the ownership determines the level of protection your shared property has from a creditor trying to collect.
Here are the most common ways property can be co-owned:
- Tenancy in Common (TIC): Each owner holds a specific share of the property, which can be unequal. These shares can be sold or passed to heirs.
- Joint Tenancy with Right of Survivorship (JTWROS): Each owner has an equal share, and if one dies, their share automatically transfers to the surviving owner(s).
- Tenancy by the Entirety: This is available only to married couples in certain states. It protects the property from the individual debts of either spouse.
Why does this matter? Because each type affects whether a creditor can touch the property when one owner owes money.
—
What Happens When Only One Owner Owes the Debt?
Let’s say you co-own a house with your sibling, and they have a judgment filed against them. If your property is held as tenancy in common or joint tenancy, a creditor may have the right to place a lien on your sibling’s share.
However, they cannot touch your portion of the asset. Still, in some states, they might force a partition sale to get their money—even if you’re dragged along unwillingly.
On the flip side, if the home is owned as tenancy by the entirety (and you’re married), a creditor cannot force the sale of the property to collect on one spouse’s individual debt. That’s one reason married couples often choose this form of ownership when available.
—
Do All Creditors Have Equal Power?
Not all creditors are created equal. Their ability to go after joint property varies depending on the type:
- Secured creditors (e.g., mortgage lenders) already have a legal claim to the property.
- Unsecured creditors (e.g., credit card companies) must sue and win a judgment before placing a lien.
- Government creditors (like the IRS) can bypass some of the usual court processes and act more aggressively.
This means that joint property may be more vulnerable depending on who the creditor is and what legal rights they already possess.
—
Can Creditors Force a Sale of Joint Property?
Creditors typically can’t force the sale of jointly owned property outright unless they go through legal channels. But if they win a judgment, they might request a partition action in court.
In a partition action, the court can order the sale of the property and divide the proceeds according to ownership percentages. This means you could lose your share even though you didn’t owe the debt. Some states discourage this process, especially if the property is a primary residence or under tenancy by the entirety.
—
Real-Life Example: How This Plays Out
Let’s imagine a couple owns a home in Michigan as joint tenants. One of them racks up medical debt that leads to a lawsuit. The creditor wins a judgment and places a lien on that owner’s 50% interest. They can’t kick both owners out, but the lien would stick until the property is sold or refinanced—impacting both parties financially.
Now consider if the home were titled as tenancy by the entirety in a state that honors it. In that case, the creditor would have no right to place a lien at all.
—
How to Protect Jointly Owned Property from Creditors
If you’re worried about how debt might impact shared property, there are a few ways to limit exposure:
- Choose the right form of ownership. If you’re married, consider tenancy by the entirety (if allowed in your state).
- Avoid mixing finances or co-owning with individuals who have significant financial liabilities.
- Use trusts or LLCs to hold property if you’re looking for legal separation from personal debts.
- Consider purchasing liability insurance to protect assets.
- Work with an attorney to review and possibly restructure ownership before debt becomes an issue.
—
Important State-by-State Differences
Not every state treats joint property the same way. In fact, tenancy by the entirety isn’t even recognized in several states. Local laws will determine the exact level of protection your co-owned property has.
Consulting with a legal expert familiar with your state’s laws is a smart step if you’re unsure about your rights.
—
Final Thoughts: Can a Creditor Take Property That Is Jointly Owned?
When it comes to joint property and debt, the details matter. While co-ownership can offer some level of protection, it’s not a guarantee—especially if the title isn’t structured correctly or if the debt is significant.
The best defense is knowledge. Understand your rights, choose the right ownership type, and stay proactive about protecting your share. If you’re in doubt, talk to a real estate attorney to make sure your assets are shielded from unwanted collection efforts.
