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California Debtor’s Rights – Judgment Liens On Real Property

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If someone goes to court against you and wins, the court will usually not force you to pay the money immediately. But, the money is due unless you appeal or challenge the judgment, so it is in your best interests to work out a payment plan or settlement to get the judgment resolved as soon as possible. If you don’t willingly agree to resolve the judgment, the creditor, who is called a judgment creditor after they’ve got a court order saying you must pay, can take other steps to get you to pay.

If you own real property in California, whether a home or condominium, an empty lot, or even commercial property like an office building or warehouse, the judgment creditor can attach the judgment to that property and use that lien to enforce payment. There are additional steps the creditor must go through to get a judgment lien on real property, and it is essential to know your rights in such a case.

A Judgment Lien On Real Property Affects Your Rights

After the judgment creditor has taken steps to convert the court’s order to pay a set amount of money, called a money judgment, into a judgment lien on your real property, your property can be at risk if you don’t pay as required. Sometimes, a judgment creditor can force a sale of your property to get the money owed, or they can wait until you sell the property and get the money from the escrow account that holds the sale proceeds. If you try to refinance the property or use it as collateral for other obligations, the amount due on the judgment lien will show up on the records and may keep you from getting the financing you seek.

How A Judgment Lien On Real Property Works

Whatever the reason that the money judgment was obtained originally, whether because of a car accident you caused that resulted in injuries that weren’t compensated by insurance or due to a personal debt you owed, the fact that the court issued the judgment saying you owe a certain amount is just the start of the process. If you don’t settle the judgment immediately or arrange to make payments, the judgment creditor can take steps to enforce or collect on the judgment. California laws establish the process for the judgment creditor to begin collecting the money through a judgment lien connected to your real estate.

As long as there is no stay on enforcement of the order, which can happen if you appeal the judgment or if you begin a bankruptcy proceeding, for example, the creditor can start to enforce the judgment to collect money. The next step to collect on the judgment is for the creditor to file an Abstract of Judgment with the county recorder in the county in California where you own real estate. Once this step is done, the debt is a secured debt, which means the creditor essentially “owns” a part of your property—up to the value of the judgment plus any fees or interest due.

A Judgment Doesn’t Last Forever

A money judgment issued by the court is valid for ten years. If the judgment creditor hasn’t taken steps to collect the money due on the judgment or renewed it by then, it no longer applies to you. The creditor must file another document with the court to avoid this result by requesting a judgment renewal sometime before the end of ten years from when the court issued the original money judgment.

After the judgment is renewed, the creditor can’t renew it again for at least five years, but if they don’t renew it before the next ten years go by, it will expire. In most cases, though, a judgment creditor will take action to enforce the debt before it has expired because it is no longer worth anything after the time has run out.

If you didn’t own any property at the time the judgment came into force, but you inherited or purchased real property within the ten years that the judgment is valid, or during the time after it is renewed, the judgment creditor is likely to see the opportunity to get a judgment lien against your newly acquired real property. Each time the judgment is renewed, the court will add the amount of interest accrued during that time to the total amount due. This is why it is definitely in your best interests to make every effort to settle the judgment before it comes to that point.

Limitations On A Judgment Lien

A judgment creditor has a court order demanding a certain amount from you, but that doesn’t mean they can collect that amount from selling your real property. There are limitations on how much money a creditor can get from selling your property. Some of the restricting factors include:

  • Homestead exemption: A certain amount of the value of your primary residence is exempt from collection. If the total value of your home less the homestead exemption is less than the judgment amount, the creditor is limited to that amount. In that case, it may not be in their interests to force a foreclosure sale to collect the judgment.
  • Other liens on the property: In many cases, the real property already has liens that take priority over a new judgment lien. One example is the mortgage you got to buy a house. Even tax liens the government has put in place to collect amounts due for back taxes take priority over a newer judgment lien.
  • Bankruptcy proceedings: Generally, when you enter into bankruptcy proceedings, collections on outstanding debts, including judgment liens, are put on hold or stayed until the bankruptcy proceeding is complete. A judgment debtor can’t force a sale or take other action to get money from you during this process.

Get Legal Advice To Guide You

If you are facing a judgment that requires you to pay money, you can benefit from the advice of an experienced debtor’s rights attorney. California collections and debtor’s laws can be complicated, and the timing of certain filings and other actions you might take to protect your assets is critical to how your case comes out. Contact the skillful legal counsel of Fitzgerald & Campbell, APLC by calling 844-431-3851 or visit us online for advice on the best options available to you in your unique situation.

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