What is a Judgment Lien and How Could It Affect Your Property?
When it comes to purchasing commercial real estate property, determining who owns the property is not nearly as straightforward as it may seem. Although an individual or a business may be the official owner, there could be liens on the property that complicate the owner’s interests and serve as a threat to ownership.
When individuals are owed money and have not been paid, they may stake a claim in terms of a lien against the debtor’s real estate. The property functions as a form of collateral against the debtor. If the owners of property try to sell, they will not be able to without either paying the debt or having the new owners assume legal responsibility for it.
These liens can take many different forms, and they don’t always have to do with the property. While some liens, like mortgages, relate specifically to the property and are considered voluntary liens (meaning the debtor agreed to the lien), others are unrelated to the property and imposed by third parties. These types of liens are involuntary in that the debtor did not choose for the title to the property to be encumbered by the lien.
Involuntary liens may include things like back taxes, unpaid child support and judgment liens, which exist when a person has been ordered by a court — either by a verdict or settlement — to pay a certain amount of money to another person. If the debtor does not pay, the person who won the judgment might decide to file a lien against the debtor’s property in the hopes of eventually collecting the amount of the judgment from the sale of the debtor’s property.
Judgment liens are common when individuals do not pay for a judgment made against them. From a creditor’s standpoint, they are relatively easy to obtain. One simply files the judgment with the Recorder of Deeds and it becomes part of the ownership records of the home. Unless the debt is paid off prior to the sale of the real estate, it will function to detract from any proceeds the owner might collect after it is sold. Even if the property changes hands, the judgment lien will continue to encumber the title to the property.
It is important to make sure a property does not have any liens on it before you buy or sell. This can be done through the District of Columbia Recorder of Deeds, although occasionally the records do not deliver complete results. If you want a thorough title search done on the property, work with a skilled Washington, D.C. real estate attorney at Tobin O’Connor Concino P.C.