Obtaining and Securing Judgment Liens

Collections Training Resource
September 18, 2012 — 992 views  
Become a Bronze Member for monthly eNewsletter, articles, and white papers.

Though many people want to trust in the inherent morality of humanity, the fact of the matter is that many people do not take responsibility for personal debt, especially when it comes to real estate. This is why courts impose judgment liens on people who fail to make a mortgage or rent payment.

A judgment lien is appointed by either a judge or impartial court, and technically applies to the property in question rather than the homeowner. However, the house or residence cannot be legally sold until the judgment lien is lifted - this can only occur if the debt is paid in full. Read on to discover how to obtain a judgment lien, the reasons behind them and the limitations they incur.

Securing a judgment lien

If you are an attorney or collection official who has just won a lawsuit or been slated by a court to collect an awarded property fee, you need to first file a Judgment Lien Certificate from the United States Department of State with your local legislator. You should always obtain a notarized copy of this in case you need to present documents to subsequent officials.

You must then explicitly locate and identify the property that the judgment lien is being applied to, which might be difficult if a person is trying to avoid debt collection. Unfortunately, the police have no legal authority here - if you can't find an address initially, you'll have to use public records databases to locate the respective property. If you cannot identify the address through your sleuthing, you can ask a court to appoint a private investigator.

Reasons to apply a judgment lien

Judgment liens can apply to any homeowner who is mired in debt. This can be due to unpaid credit card bills, late utility payments and even home refinancing loans. However, judgment liens are normally awarded in cases of missed mortgage payments or foreclosed homes. From a collection standpoint, a bank or court essentially seizes control of a property and forces a homeowner to pay outstanding debt before they can list the residence on the open real estate market again.

Limitations incurred

When judgment liens are bound to a home, the property owner cannot apply for a home equity loan or second mortgage. It is extremely difficult to offload a home with one or multiple judgment liens, as these limitations are also listed in public databases.

Collections Training Resource