What is an Owelty Lien?

An owelty lien is a special type of lien reserved to a spouse in a divorce. Basically, it is a lien on the entirety of real property which was jointly owned by a husband and wife.  Upon divorce, one spouse receives fee simple title to such real property subject to an owelty lien given to the other spouse.  The owelty lien given to the other spouse is a first lien on the property which states upon sale of the real property the other spouse will be paid before any net proceeds from the sale of such property is distributed to the spouse who owned the property.  The owelty lien might be a lien representing the value the non-owner spouse has in the real property or it might be a lien for a specific sum of money owed by the owner spouse to the non-owner spouse such as attorney fees, credit card debt, etc.  An owelty lien must be released in the same manner as a regular lien on real property.  This means a release of lien must be filed in order for an owelty lien to be released against real property. The bad part about an owelty lien is sometimes it is only mentioned in the divorce decree itself, unbeknownst to the owner spouse.  This means the owner spouse would receive a nasty shock when such spouse attempted to refinance an existing mortgage and/or desired to sell the real property.  Alternatively, upon the death of such owner spouse, the beneficiaries of such owner spouse might receive this same nasty shock when such beneficiaries attempt to sell the real property in the estate.   If you have been involved in a divorce action and if there was real property involved in such divorce, you should review your divorce decree very carefully to determine if an owelty lien has been placed on any of the real property you own.  If you wish to receive further information regarding this area of law please feel free to contact our office to schedule a free consultation regarding the same.