How is a judgment lien created?
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Insurance Lawyer
Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...
Jeffrey Johnson
Insurance Lawyer
Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...
Jeffrey Johnson
Updated July 2023
State law, as well as local practice, typically differs with respect to the creation of a judgment lien. However, the actual mechanics of creation of a judgment lien are usually similar. The judgment creditor first perfects the judgment and then tries to get the judgment debtor to voluntarily satisfy the judgment. If the judgment debtor fails to voluntarily satisfy the judgment, a judgment lien can be created against the judgment debtor’s property.
To create a judgment lien against real property, the judgment creditor typically obtains an Abstract of Judgment from the court that issued the judgment. The Abstract of Judgment lists information about the judgment creditor, the judgment debtor and the amount of the judgment. The judgment creditor then records the Abstract of Judgment with the County Recorder in the county in which the judgment debtor owns real property. Usually the judgment lien is then satisfied from the sale proceeds when the judgment debtor sells the real property. In the meantime, the judgment creditor has a lien against the property (which in effect secures payment of the judgment) and the outstanding balance of the judgment increases due to the addition of statutory interest on the amount of the judgment which remains unsatisfied.
To create a judgment lien against personal property, the judgment creditor typically files a notice of judgment lien with the Secretary of State where the judgment debtor resides. The judgment lien notice contains information about the judgment creditor, the judgment debtor, the date, court of issuance and amount of the judgment, and the date that a copy the notice was sent to the judgment debtor. A judgment lien against personal property of the judgment debtor is typically effective against property upon which a security interest may be perfected, such as accounts receivable, chattel paper, equipment, farm products, and negotiable documents of title (although some states exclude certain property such as motor vehicles and inventory of a retail merchant held for sale). As with a real property lien, typically the judgment is satisfied from the sale proceeds when the judgment debtor sells property that is subject to the lien.
In most instances, any property of the judgment debtor which is transferred without satisfaction of the judgment is transferred subject to the lien. This means that if the lien is not satisfied prior to the transfer being made, the property remains subject to the lien in the hands of the transferee.
Case Studies: Understanding Judgment Liens in Real and Personal Property
Case Study 1: Creating a Judgment Lien on Real Property
John, the judgment creditor, obtains a judgment against Sarah. To secure it, John follows the process of creating a judgment lien on Sarah’s real property. He gets an Abstract of Judgment from the court, listing details about the parties and the judgment. John records it with the County Recorder, creating a lien on Sarah’s property.
Case Study 2: Creating a Judgment Lien on Personal Property
Mark, a judgment creditor, files a notice of judgment lien against Sarah’s personal property. This includes accounts receivable, equipment, and chattel paper. The notice contains key details about the judgment. By creating a judgment lien, Mark secures payment from the sale proceeds if Sarah sells any property covered by the lien.
Case Study 3: Transferred Property Subject to a Judgment Lien
In this case study, we explore the situation where John, the judgment creditor, discovers that Sarah transferred her property to Mark without satisfying the judgment lien. Despite the transfer, the property remains subject to the lien. We examine the implications for Mark as the transferee and how the judgment lien continues to affect the property.
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