Collect Your Court Judgment With a Judgment Lien

"What's a judgment lien, and how does it help me collect my small claims court judgment?"

If a question like that brought you here, you're in the right place. We explain what a judgment lien is, how you get one, the advantages and disadvantages associated with them, and more. We'll also point you toward resources that will help you understand how judgment liens work in your state.

In a nutshell:

• a judgment lien is notice to the world that you have a money judgment against the party you sued, and you're securing that judgment with a lien against specific property
• you get a judgment lien by recording it with the correct agency, usually the county recorder or register of deeds for the county where the property is located
• when the judgment debtor sells or refinances the property, they'll have to pay you to complete the transaction
• judgment liens can be a simple, low-cost, no-hassle way to collect, but
• it'll probably take a while before you put money in your pocket, and if others are ahead of you in line or the judgment debtor declares bankruptcy, you might not get anything.

Before diving in to judgment liens, you might want to find out more about small claims judgment collections generally. Also, learn about common collection problems and how to avoid them.

What Is a Judgment Lien?

In the simplest terms, a judgment lien is a legal claim against specific property, used to secure payment of a judgment. It's distinct from, but closely related to, a judgment.

A judgment is a court order that entitles you—the judgment creditor—to a sum of money from the party you sued, called a judgment debtor. But a judgment isn't self-executing. That is, you can't take your judgment to the judgment debtor's bank or employer and demand payment. To turn your judgment into cash, you need other legal tools.

A judgment lien is one such tool. When properly recorded (see below), a judgment lien works by letting the world know that:

• you have a judgment against the judgment debtor, and
• you intend to collect your judgment from the proceeds of the property to which the lien has attached.

In addition to (or in lieu of) judgment liens, judgment creditors often use other tools including wage garnishments and bank account attachments.

How Do You Get a Judgment Lien?

Each state makes its own rules for getting judgment liens, and local courts and agencies often supplement those rules with their own specific procedures. Typically, judgment liens can only be recorded against real estate, but a handful of states allow them to be placed upon personal property like cars, boats, RVs, antiques, and more. Check your local law for details.

Steps to Get a Judgment Lien

Here are the general steps you'll follow to get a judgment lien. Your state might use different terminology or have its own twist on what we outline here, but the basic concepts are the same.

• Step 1: Get a judgment. You can't get a judgment lien without first being awarded a judgment by a federal or state court. When your judgment is from federal court or a court of a different state, you'll have to take additional steps to "register" or "domesticate" the judgment before you can move to the next step. As an example, here are the steps to domesticate a judgment in Miami-Dade County, Florida.
• Step 2: Get a certified copy or abstract. You'll need a certified copy or abstract (summary) of your judgment. Get this from the clerk of the court that issued your judgment. In many states, you can request it online. If not, go to the court clerk's office and tell them what you need. You'll pay a small fee—usually between $5 and $30—for each certified copy you request. You need one for each county where you want to record a judgment lien.
• Step 3: Identify the recording agency. Most often, you'll record with the county recorder or the register of deeds in the county where the property is located. In a few states, you record your judgment lien with the main state court (probably called the "circuit court" or "district court," but some states use different names) in the county where the property is situated. In the few states that let you record judgment liens against personal property, chances are you'll record a personal property lien with the secretary of state's office.
• Step 4: Record your judgment or abstract. Take or deliver your certified judgment copy or abstract to the correct recording agency. Tell them you want to record a judgment lien. They'll know what to do. Expect to pay a recording fee of $10 to $90 for each judgment lien you record, though the charge will be higher in some states or localities.
• Step 5: Notify the judgment debtor. State law probably requires you to notify the judgment debtor when you record a judgment lien. Ask the recording agency if there's a form you're supposed to use.

Judgment Lien Expiration and Extension

The duration of your judgment lien—typically 5 to 15 years—is up to state law. Most states let you extend the life of a judgment lien, provided you do so before the lien expires. You can file a new judgment lien after the old one runs out, but you'll lose your place in the lien priority line (see below).

In every state, a judgment lien automatically disappears when the underlying judgment expires, which typically happens between 5 and 20 years after the judgment was entered or became final. With a few exceptions, state law lets you renew or extend a judgment before it expires. But you'll probably need to take extra steps to extend your judgment lien, because renewing a judgment usually doesn't automatically extend associated liens.

Special rules likely apply to property the judgment debtor jointly owns with others. You might not be allowed to record a lien in the first place. Even if you can, be on the lookout for restrictions on your ability to collect.

Learn more about how to get a judgment lien in your state.

How to Collect on a Judgment Lien

There are several ways to collect on your judgment lien, but one stands out among the rest:

• foreclose on the lien
• collect when another creditor forecloses, and
• wait for the judgment debtor to sell or refinance the property.

Foreclosing on a Judgment Lien

State law might let you initiate foreclosure or similar collection proceedings on your judgment lien. But even if you can do that, it likely isn't a good idea for at least two reasons.

• First, chances are your lien is junior to others, like a purchase money mortgage or maybe other judgment liens. When you foreclose, those senior lienholders have lien priority over you. Foreclosure kicks off a "first-come, first-served" feeding frenzy, where those ahead of you collect first. If there's anything left when your turn comes, it's not likely to be enough to pay you in full.
• Second, foreclosing probably ups the odds that the judgment debtor will declare bankruptcy. While there's a chance your lien will survive (see "Bankruptcy and Lien Avoidance," below), don't count on it. It's just as likely (if not more likely) that you'll find yourself at the end of a long line of unpaid creditors.

Collect When Another Creditor Forecloses

When another creditor chooses to foreclose on their lien, you'll be forced to go along for the ride. You can collect based on your lien priority, if there are enough funds and the judgment debtor doesn't make a beeline for bankruptcy court. As with foreclosing yourself, this route isn't likely to produce the best outcome for you.

Wait for the Judgment Debtor to Sell or Refinance

It's best to think of a judgment lien as a type of long-term collection strategy. When you're not in a hurry to collect, your best move is probably this: Sit tight and do nothing. As long as your judgment lien stays alive, it works like a legal placeholder. Instead of you taking further action, simply wait for the judgment debtor to come to you.

When will that happen? When the judgment debtor wants to sell or refinance the property. The buyer or lender will insist that your judgment lien be paid or satisfied so it's not a cloud on the title. The judgment debtor will have no choice but to pay you off or make other satisfactory arrangements. Because you hold most of the cards, you'll have much better negotiating leverage.

Advantages of Using Judgment Liens to Collect a Judgment

Using a judgment lien to collect brings three important advantages. Judgment liens are:

• cheap and easy to create
• a fairly simple, no-hassle way to collect, and
• unlikely to push the judgment debtor into bankruptcy.

Judgment Liens Are Cheap and Easy to Create

In most states, you can record a judgment lien for under $100. And in today's connected world, you can probably do most of the legwork from the comfort of your couch. But even if you need to make a trip to the courthouse or the county register of deeds office, the process should be quick and fairly painless.

Once you've properly recorded a lien, it does most of the work for you. If you recorded a lien in a state that lets you extend it, be sure to keep an eye on your lien expiration date so you can act before time runs out.

Judgment Liens are a Simple Way to Collect

As mentioned above, the best thing to do with a judgment lien is—nothing. Keep it alive and wait for the judgment debtor to sell or refinance. Before that can happen, they'll have to pay you or make other satisfactory arrangements. No court dates, no fights, and no hassle.

You're Not Likely to Push the Judgment Debtor Into Bankruptcy

Some collection methods—wage garnishments and bank attachments are examples—often send the judgment debtor straight to bankruptcy court. Judgment liens, by contrast, are a sort of stealth collection tool. They sit quietly, and don't exert much (if any) collection pressure. The judgment debtor can simply go on with their life, giving little thought to what waits down the road.

When it comes time to pay you, bankruptcy will usually be the last thing the judgment debtor wants. A bankruptcy filing will immediately bring any property sale or refinancing to a screeching halt. Facing the prospect of putting some cash in their pocket, the judgment debtor will be willing (though likely not happy) to make you go away with a check.

Disadvantages of Judgment Liens as a Collection Tool

Judgment liens do bring some downsides. A couple—time to collect and lien priority—we've already covered. Here are two more:

• watch out for the homestead exemption, and
• bankruptcy can bring lien avoidance.

How the Homestead Exemption Protects a Primary Residence

When you record a judgment lien against the judgment debtor's primary residence, you'll have to navigate around the state's homestead exemption at collection time. Depending on state law, this exemption lets the judgment debtor shield all or some portion of the equity in their primary residence from creditors.

An example illustrates how the exemption works. Say you put a $15,000 judgment lien on a primary residence with a fair market value of $310,000. There's a $230,000 mortgage on the property, and the mortgage company has foreclosed. The state's homestead exemption lets the judgment debtor protect up to $50,000 in equity. The costs of the sale come to $20,000. How much will you collect?

The costs of sale come straight off the top: $310,000 - $20,000 = $290,000. Then deduct the balance of the mortgage, so $290,000 - $230,000 = $60,000. The next $50,000 goes to the judgment debtor, leaving you with $10,000. That's all you'll collect from this property. If you want the remaining $5,000 of your judgment, you'll have to find it elsewhere.

Bankruptcy and Lien Avoidance

When a judgment debtor files for bankruptcy, one of the things they'll try to do is "avoid" (wipe out) judgment liens. Federal bankruptcy law allows this when a forced sale of the property would "impair" (reduce or completely eliminate) the value of the judgment debtor's homestead exemption. The amount of a judgment lien gets reduced dollar-for-dollar by the amount that the homestead exemption is impaired.

Note that lien avoidance doesn't reduce the value of your judgment—just the value of your judgment lien. And liens on non-homestead properties like a vacation home or investment land aren't subject to this kind of lien avoidance.

Get Help With Your Judgment Lien Questions

For judgment creditors who aren't in a rush to collect, judgment liens can be a viable collection strategy. They're quick and easy to record, don't cost much, and once you locate the judgment debtor's property, judgment liens do most of the work for you. Unfortunately, judgment collections can get complicated very fast, especially when you run into a judgment debtor who's determined not to pay.

If you need help getting your money, an experienced collections lawyer might be a wise investment. They know your state's collection laws and are familiar with state and local rules for recording and extending judgment liens. Buying an hour or two of attorney time can help you develop an efficient collection plan that maximizes the cash you get to pocket.