Judgment And A Judgment Lien

What Is The Difference Between A Judgment And A Judgment Lien?

Lose a civil lawsuit and you are likely to have a judgment entered against you. Said judgment may be exclusively monetary. It could also include non-monetary penalties as well. In either case, it is possible to eventually face a judgment lien as a result of losing the case. But do not confuse the two. A judgment and judgment lien are two separate legal entities.

Though the distinction between the two may seem minor, it is not in the eyes of the law. Courts, attorneys, and collection agencies know this, which is why they are very particular about the language they use. You will not necessarily find such careful language in online posts written by non-experts. So if you are facing a civil lawsuit, do not be quick to believe everything you read.

The End of a Legal Proceeding

Moving on to the heart of the matter, a judgment is an action taken by a court at the end of a civil legal proceeding. Imagine a company taking a customer to court for failure to pay a bill. Whether or not there is an actual trial, the court renders a decision to conclude the case. If the court rules in favor of the company, a judgment is entered against the customer. That judgment recognizes the legitimacy of the debt and requires a customer to pay up.

Judgments are entered into court records at the conclusion of civil cases. From there, it is up to creditors, their attorneys, and their collection representatives to enforce the judgments. Courts do not get involved with enforcement except under certain circumstances.

Liens Are Collection Tools

A judgment lien is separate from the judgment itself. To better understand what it is, let us unpack both terms. A lien is a legal claim to a financial interest in a piece of real property. In simple terms, a lien requires that the lien holder be paid out of any proceeds from the sale of an attached property.

The ‘judgment’ portion relates to the fact that the lien is placed on a property only after, and as a result of, a court ordered judgment. Note that judgment liens are not recorded in court records. Rather, they are recorded by the County Clerk in whatever county the attached property is located in.

Salt Lake City’s Judgment Collectors notes that judgment liens are not automatic in most states. Though there are exceptions, creditors usually have to file judgment liens separately. They are not placed on property as part of the civil proceeding.

Other Property Liens

Don’t confuse judgment liens with other types of property liens. Not all liens are created equally. Also, if multiple liens exist on a single piece of property, lien holders are paid according to their lien position. The lien holder in first position would be paid first, then the second, and so on.

What other types of liens exist? The one most people are familiar with is the mortgage lien. It is a lien placed on a property when a buyer obtains a mortgage to purchase said property. In most cases, mortgage lenders occupy the first position.

Construction liens may be placed on homes when major remodeling work is done. Contractors utilize the liens to protect themselves in the event their customers do not pay for work done.

Judgments and judgment liens are often talked about together. Even so, they are separate entities in the eyes of the law. A judgment is entered as a result of a civil case. A judgment lien is filed separately as a means of enforcing the original judgment. That is really it in a nutshell.

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