If you are sued in court and lose the case, the winning party receives a judgment, which means that you owe the prevailing party a sum of money. That party may then file a judgment lien, which is a lien that attaches to your real estate. When a judgment lien is placed on the property you own, it acts as an assurance that you’ll pay the amount owed. Once a judgment lien is on your real estate, it typically remains until you decide to sell or refinance the property. When you sell or refinance your property, the lien is paid off. Sometimes, however, a piece of property with an attached judgment lien is foreclosed. In this article, we examine how judgment liens are affected by the foreclosure process.
How a Judgment Lien Attaches to Real Estate
A judgment lien is created when a copy of the judgment is recorded in the county land records. A judgment is typically filed in the county where
- you own real estate, or
- you may acquire real estate in the future.
Priority of Judgment Liens
A lien’s priority determines when the lienholder will be paid after a foreclosure. A judgment lien’s priority is usually determined by its recording date. However, there are instances where the recording date of a judgment lien doesn’t determine priority. For example, judgment liens are junior to property tax liens regardless of the recording date.
In most cases, judgment liens are junior to a first mortgage (and possibly a second mortgage). Based on the recording date, a judgment lien may also be junior to other judgment liens previously filed by other creditors.
Foreclosures and Judgment Liens
When a home is foreclosed, any judgment liens that were recorded after the mortgage are eliminated by the foreclosure. If surplus funds exist after the foreclosing lender’s debt has been paid off, they are distributed to other creditors holding junior liens, such as judgment lienholders and second mortgages.
Can a Lienholder Foreclose a Judgment Lien?
A judgment lienholder can also foreclose on a piece of property. However, judgment lienholders rarely do this due to the time and money required to complete the foreclosure process. In addition, even if a judgment lienholder were to foreclosure, the odds of actually collecting the funds owed are low because senior mortgages or other liens have priority.
Act Now to Remove or Settle Your California Judgment Lien
Debt collectors frequently make mistakes when filing lawsuits that result in judgment liens on real estate. So, if a creditor has placed a lien on your real property in California, you should contact a California attorney as soon as possible for assistance. When you contact the Fullman Firm, our experienced judgment lien attorneys will do everything in our power to ensure that your case is a success. Please contact us today to schedule a free consultation.