Real Estate Liens

Enforce Judgments with Real Estate Liens

A creditor can enforce a judgment with a real estate lien in effort to collect their money. A real estate lien is a legal method of collecting an outstanding debt balance often used in judgment enforcement cases all over. The type of property can determine the complexity of a real estate lien. Real estate can be owned by one individual, a couple, or a group of individuals. The property judgment needs a certain amount of equity for the legal attachment to be viable.

There are additional rules and regulations to understand when a creditor decides to use this type of collection effort.

Placing a Real Estate Lien through the Courts

A real estate lien needs to be won through a court action. There are certain steps that are taken to win a real estate lien, and these steps are the following

  1. A creditor needs to show through a proof of claim that a debt has occurred.
  2. The debt is owed by the defendant for the exact amount that is shown on the proof of claim.
  3. The creditor takes this claim and receives a successful judgment against the individual listed on the court documents. A debt that is owed by a couple can be placed in a joint credit account. A group of individuals can own a real estate property as well. The debtor being targeted for collection needs to match with the successful debt judgment.

Equity in the Property

Collecting a judgment debt against a real estate property with no substantive equity may be futile. The judgment can be legally placed on the house, but collecting a cash payout may not occur. The property needs to have a significant amount of equity that can be used to pay back the creditor. A house with negative equity may be judgment proof or not worth any collection efforts. A real estate property that is part of a current bankruptcy filing cannot be used for a new judgment. The property is now a part of a bankruptcy estate under the management of a court appointed trustee. A new creditor has a period of time to include a particular debt judgment in a bankruptcy payout.

Sale of Property

A sale of a house is usually not required for most judgment liens. The lien is placed on the real estate, and collection against the court ordered lien is paid out when the house eventually sells. A private residence can sit for years with a lien judgment attached, and a payout may not occur for an extended period of time.

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©2011-2018 The Judgment Experts Inc. For information purposes only, not to be considered legal advice. If you require legal advice please contact an attorney.