Judgment Liens

Lien Remedies CdJudgmentLiensAndAbstractsOfJudgment

A lien establishes ("attaches") the creditor's judgment interest in an asset of the defendant. Once the judgment lien has attached to the debtor's asset, the creditors interest in the asset is superior to that of all third-parties who had knowledge of the lien. If the creditor's lien has been filed of public record, third-parties are deemed to have "constructive notice" of the lien.

Post-judgment liens are known as judicial liens and are a form of non-consensual lien. When the court places the lien on the debtor's asset, the lien is said to attach to the asset, and attachment is thus the court forcing a lien on the debtor's asset against the debtor's wishes.

As between the creditor and the debtor, a lien which has attached to the debtor's asset will be valid. As to third-parties, however, it will usually be necessary for the creditor to perfect the lien by making some public filing. The act of perfection usually gives the creditor superior lien rights to third-parties who later attempt to place their own lien on the asset.

Some number of judgments are collected by the creditor doing nothing more than obtaining a lien on some valuable piece of property of the debtor. For instance, a creditor might establish a lien on a piece of valuable real estate that the debtor owns, and the would receive up to the amount of the judgment, plus interest, when the property is eventually sold by the debtor.

An abstract of judgment is a form that is filed by the creditor with the county recorder's office, and which establishes a judgment lien on all the debtor's interest in real estate owned then or thereafter in that county, i.e., if the creditor has filed an abstract of judgment and the debtor subsequently buys or inherits a piece of real estate in that county, the abstract of judgment would attach to it. Since the abstract of judgment shows up in the title records, it means that the debtor cannot convey good title to some third-party purchaser of the real estate, and so therefore must deal with the creditor before being able to sell the property. The downside to an abstract of judgment is that it is only effective in the county where it is filed, so creditors will frequently file abstract of judgment in the debtor's county of residence, surrounding counties, and in any other counties where the debtor might have real estate. It is also only effective as to an interest in real property.

Some states allow a lien on the debtor's personal property in the state to be created by a special filing with the Secretary of State's office. These filings create judgments liens on personal property only, and are very similar in their form and effect to a U.C.C.-1 filing. They typically do not cost much to file, but sometimes they can make a difference, particularly if two creditors are squabbling over the same asset.

Judgment Liens Topics And Opinions