Expertly Reviewed By: Serah Waweru, Esq., on April 12, 2023
Picture this situation – you’re at home enjoying a quiet moment with your family when you receive the notification— you’ve been sued! That’s scary, right? When that happens, one of the biggest questions you’ll likely have in mind is — can they take away your house? Well, the answer to this question is it depends on your specific situation.
Let’s discuss the potential legal consequences of being sued and discuss how such a lawsuit could affect your property ownership, particularly your house.
But first things first, who can sue you?
Any individual 18 years or older can file a lawsuit against you.
And when they do, they are essentially asking the court for a remedy (usually financial) to an issue. The court will then determine if the person suing you has legal grounds to do so and the remedies they may be entitled to if they have legal grounds to sue.
In most cases, civil courts won’t allow someone to sue you and take your house as part of the remedy. However, there are some circumstances in which this could happen.
Here’s an example.
Let’s say you’ve failed to pay your mortgage or taxes on your property. In that case, the lender or government entity may foreclose on your home to recoup the money owed.
The same applies if you listed the house as collateral for a loan or the lawsuit involves someone with a legal claim to the property.
Another example is when you’ve been sued and ordered to pay damages to the other party; the court may place a lien on your property to ensure that you pay what you owe the plaintiff (the party taking legal action against you).
Can a Lawsuit Take Your House?
While it’s unlikely that someone would be able to sue you and take your house as part of the remedy, it’s important to be aware of these possibilities. This can help you protect yourself and your assets from such lawsuits.
If Someone Sues You, What Can They Take?
So, what can they sue you for?
If someone sues you and wins the lawsuit, the amount of money they may be able to recover from the sale of your house will depend on the value of your home and the amount of debt you have against it. If you have a lot of equity in your home, they may be able to get more money from the sale of the home than if you have little or no equity.
Keep in mind that home equity is the difference between the value of your home and what you owe the lending company.
So, when can they take your house if they sue you?
If someone sues you, they may be able to take your house if the lawsuit is successful. This is called execution on a judgment, and it’s one of the ways creditors can collect on a debt.
However, a few things must happen for someone to take your house through execution on a judgment.
If Someone Sues You, What Happens?
First, you must lose the lawsuit.
Then, if the person suing you wins, they’ll be granted a money judgment against you for the amount you owe them.
Once the creditor has a money judgment against you, they can start the process of taking your property. This usually involves filing a notice with the court and then hiring a sheriff or marshal to carry out the seizure.
In some cases, the creditor may try to work out an agreement with you to pay off the debt instead of seizing your property.
If your house is seized after losing the lawsuit, you’ll need to move out and may end up losing any equity you have in the property. However, if you don’t move out, you may also have to pay rent to live there until the property is sold at auction.
How to Protect Your Assets From Lawsuits
There are a few things you can do to protect your assets if you’re worried about losing them to a lawsuit. In fact, it’s advisable to protect your assets even if you’re not worried about any lawsuit.
This is because lawsuits strike when you least expect them. And when that happens, you may not have enough time to get things right and protect yourself and property. As the saying goes – it’s better to be safe than sorry.
Create a Homestead Exemption
To protect your house from a lawsuit, you can create a “homestead exemption.” This option allows you to shield a certain amount of equity in your home from creditors.
Put Your Property In a Trust
The other option is to put your property into a trust. However, it’s important to note that not all trusts are the same; some may still put your property at risk of being claimed in a lawsuit.
For instance, a living trust may not fully protect your property when you lose a lawsuit. This is because living trusts are revocable, and you technically still own the property.
On the other hand, an asset protection trust may offer better protection for your assets in the event of a lawsuit.
Purchase Liability Insurance
You can also purchase liability insurance to protect you and your property from such lawsuits. However, it’s important to note that there are many different types of liability insurance. For instance, personal liability insurance will protect you against civil lawsuits, but only if the lawsuit is covered by the terms of that particular policy you’ve purchased. This will help cover any damages if someone sues you and wins.
Can You Lose Your Home in a Lawsuit in California?
You can potentially lose your home in a lawsuit in California if a court determines you must sell off the home to pay off a debt or judgment. However, as discussed earlier, there are protections in place for homeowners in the Golden State, and throughout the country, such as homestead exemptions. These protections limit the amount of a person’s equity in their home that can be taken to satisfy a judgment. Additionally, in some cases, it may be possible to negotiate a settlement or payment plan to avoid losing a home in a lawsuit.
What Happens if Someone Sues You and You Have No Money?
If someone sues you and you have no money to pay them, the court may order that your wages be garnished. Wage garnishment is when a portion of your earnings is deducted from your paycheck to settle a debt you owe, in this case, a lawsuit judgment. In addition, if you don’t have a job, the court may order that your assets be sold off to pay the person who sued you. In some cases, the court may even send you to jail if you cannot come up with the money to pay the person who sued you.
How Can I Protect My House From a Lawsuit?
One way to protect your house from a lawsuit is to purchase adequate insurance coverage. This will help to cover any damages that may be awarded in a lawsuit against you. Also, consider speaking with an experienced estate planning attorney to learn how to protect your property.
Can I Sue Someone if I Have No Money?
Yes, you can sue someone even if you have no money. However, it may be difficult to do so effectively without the resources required to pay for legal representation and related expenses. This is because lawsuits can be expensive, and you want to ensure that what you are suing for is worth these expenses.
In some cases, you may be able to find a pro bono (free) lawyer or a legal aid organization that can assist you in pursuing a lawsuit against the other party. However, these resources are often limited and may not be available in all cases. Additionally, if you cannot afford court costs and other expenses associated with litigation, it may be challenging to pursue a lawsuit to its conclusion.
Lastly, most personal injury lawyers work on a contingency basis, meaning they only get paid if you win. So yes, they may be able to help you file a lawsuit if it’s worth it.
Can You Sue a Poor Person?
Yes, you can, but if they do not have any assets, there may be no point in suing them since you will not be able to collect any judgment against them. You should also consider whether or not the person you want to sue is likely to win their case. If they have a good chance of winning, they may be able to get a court order requiring you to pay their attorneys’ fees and costs.
Enjoyed reading this article? Here’s another one discussing how long it takes to settle a lawsuit.