Legal Question in Credit and Debt Law in Georgia

Loans cannot be turned into liens. Liens are created when you create the loan. If you wanted a deed to secure debt, you missed that opportunity.

If the loan is in default, she may be able to sue, and if she wins the case, that judgment lien could be used to levy on property.

Your post makes no sense. First you say she used the deed as collateral, as if she gave the lender a security interest in the house, and then you say you want to convert it into a lien in order to sell, as if there is no lien. If she merely handed over a copy of deed as "collateral," it is basically meaningless so she can sell the house and pay it. It appears you don't actually know what happened, which makes it impossible to give you a response. For $720, how about you just help her pay the loan back and get rid of the issue, unless she did something stupid like actually signing a deed to the lender.

You cannot convert loans into liens as noted. People who mortgage their property (they are called deeds of trust) fill out security agreements and notes and these documents get recorded in the land records. Was this done? Or did your girlfriend merely handover a copy of the deed?

(1) If there is a recorded lien, your girlfriend can still sell the property. This is done all of the time. At the closing, the buyer's closing attorney will cut a check to the lender for the $720 and he will want a lien release from the lender. The balance will then be paid to your girlfriend.

(2) If the lien is not recorded, come up with the $720 and get the deed back and then sell the property. You can even draw up an agreement indicating that your girlfriend promises to reimburse you for the $720.

If you don't have it, see if your girlfriend can go to a real lender and take out some money to pay off the first lender. She will then go through the steps outlined in item 1 if the new lender records a lien. However, Attorney Riddle is correct - if she just handed the deed to somebody, that is not enough to prevent her from selling the property. There is no agreement unless the security agreement and other documents are recorded.

The only other way liens are created is where someone owes money to a lender. They don't pay and the lender sues and recovers a judgment. The judgment acts as a lien on any real property. If and when the property is sold (unless the judgment is paid before that) the lien on the property must be satisfied.

I know you mean well, but its not ethical for a lawyer to discuss your girlfriend's legal issues with you. She needs to go see a lawyer or post here herself but she needs to articulate the facts better or else take documents to the lawyer so that he/she can determine if something was filed or not.