In many judgments for civil cases, the party ordered to pay money does not have the means to immediately pay the ordered amount. So, what might the judgment creditor do to ensure the judgment debtor pays the money? One option the creditor might choose to utilize is a judgment lien.
What is a Judgment Lien?
A lien (of which there are many types) is a legal instrument that can be applied to property to help satisfy a debt. A judgment lien, specifically, is a legal tool that may be initiated after a judge or jury rules for a party seeking money damages in a civil case. Many states allow judgment liens to be filed upon different types of personal property, but Texas only allows judgment liens to be filed on real property, such as houses, condos, or land. The judgment creditor will file the judgment lien with the county clerk in the county that the judgment debtor has real property in.
How Does a Judgment Lien Work?
After a judgment lien, which is often referred to as an Abstract of Judgment, is filed, it will be connected to the piece of real property for 10 years. That means that for 10 years, the debtor will not be able to sell the property and keep the proceeds from the sale. The Abstract of Judgment is public record, meaning that anyone who inquires about purchasing the property will know about it. For this reason, finding a buyer for lien-attached property is very difficult. If the judgment debtor is able to sell, the creditor must be compensated in accordance with the court judgment from the money generated.
Are There Exceptions to Judgment Liens?
Texas, notably, allows a “homestead exemption” when it comes to judgment liens. Simply, a debtor’s primary residence is not eligible for a judgment lien. Also exempt are college funds, retirement accounts, and cemetery plots. However, there is a catch to the homestead exemption in Texas. If, after selling a homestead that has a lien attached to it, the debtor does not apply funds from that sale to a new primary residence, that money might be vulnerable to collection.
Having a judgment lien filed on your house might have you feeling handcuffed, on top of already feeling stressed about not being able to pay a debt. The good news is that your primary residence is generally insulated from seizure in this case, but there are always exceptions and every case is different. To see how we can help resolve your debt situation while protecting your rights, reach out to Ciment Law Firm today to get started with a free consultation.