Each year, millions of homes are seized as a result of property and judgement liens, later to be sold to the highest bidder—frequently, at considerably less than full market value. And while that may be music to the ears of banks and buyers alike, it still places the average homeowner in considerable distress.
When it comes to judgement liens, the impact can be even more devastating. Especially in Utah, where judgement liens can remain attached to your property for up to eight years—even if it changes hands.
What Is A Judgement Lien?
A judgement lien can occur as a result of a civil lawsuit in order to secure a debt if a debtor is found to have insufficient funds or refuses to pay a settlement. It ensures that a creditor has the right to proceeds resulting from the sale of the debtor’s personal property—more often than not, real estate.
The lien is recorded in the county where either the debtor resides or the property is located and is entered as legally binding proof of the creditor’s entitlement to the property. Judgement liens placed will undoubtedly affect future home ownership if you’re unfortunate to be subject to one; and will effectively bar you from selling or signing ownership of your home.
While many states will allow judgement liens to be placed on non-real estate property (such as RVs, equipment, antiques and other valuables), in the state of Utah a judgement lien refers to real estate for the most part. It’s not uncommon that wages and tax returns may be garnished as well, but most homeowners will find property seizure to be the primary goal of a judgement lien.
What Is The Difference Between A Judgement Lien And A Property Lien?
Property liens are typically acquired through your voluntary consent, a mortgage contract being the most relevant example. Upon signing your mortgage, you voluntarily consented to pay your bank a mutually agreed upon sum contingent on forfeiting your property any regular payment be omitted.
However, property liens can also be involuntary—with mechanic’s liens being among the more frequent. These usually may not involve lawsuits, but can be filed with the court of your county and prove to be a significant encumbrance if you’re trying to sell your home at a later date.
A judgement lien, on the other hand, is involuntary—you have no say over the outcome of any case brought against you; and in lieu of paying full or partial damages, you have no choice but to remit some form of personal property.
However, in Utah, a creditor’s ability to collect under a judgment lien can be affected by any number of factors, including other liens in place, foreclosure in Utah or bankruptcy proceedings, and a particular clause known as a homestead exemption.
A homestead exemption is a fixed amount of value that is exempt in court rulings if the property is found to be the debtor’s primary residence. However, in most states a homestead exemption is only allotted to a partial amount of the equity of a home. In Utah, an individual is entitled to protect up to $30,000 of their home equity. State law permits joint owners of a property to use the homestead exemption individually—allowing up to $60,000 of equity protection in the case of bankruptcy proceedings.
Can Judgement Liens Affect Owning A Home In The Future?
Whether you purchase property in the county in which a judgement lien was entered or whether it’s outside of it, that lien will attach itself to your name for a fixed amount of time. In Utah, that time can be up to eight years—although some creditors may legally choose the right to renew a lien indefinitely. You’ll find purchasing property with a judgement lien next to your name to be virtually impossible; and in most instances, loans and non-real estate related purchases may be affected adversely, as well.
How Do I Get Rid Of A Judgement Lien?
The easiest solution would be to pay off your debt in full. Creditors are legally required to release the lien upon payment, allowing you to sell, trade or otherwise transfer your property. However, that’s rarely a realistic option for many; with the next steps of foreclosure or possibly to file for bankruptcy. While filing for bankruptcy allows you to use federal law to remove a judgment lien, the impact on both your credit and your professional reputation is at even greater risk.
If you are in a situation where the property lien is voluntary or involuntary on your home we can help at GaryBuysHouses. We buy homes “as is”. Yes, that means encumbered property. Whatever situation you are in reach out to us here and in 10 minutes or less we will give you a fair cash offer for your home or property that has liens from any source. We have a professional legal team standing by to make the whole process run smoothly for you.