Q: I have an interesting scenario that is a unlike any other that I can find described online. I have won a substantial judgment from a court case with our former tenant(s). The judgment has gone unpaid for several years; they have no intention of paying and don’t have the ability to do so.
I keep tabs on them in various ways, and I've come to learn that the parents of one of the debtors has put their home into a life estate via quitclaim deed and the debtor (son) is one of the grantees, along with (presumably) his two siblings.
Can I place a lien on that property now that it is seemingly in his name? Any advice you can offer is appreciated.
A: You have an interesting situation. When you sue someone, go to court and finally get a judgment against them, that judgment will live for quite some time until it expires or is paid off.
Let us explain. Judgments are in force for a certain period of time unless you take action to extend the term of the judgment. Frequently, judgment terms are for seven years or more, depending on the laws of your state.
You can put a lien on any property owned by your debtor. You've described a situation where the debtor may come to own property in the future but doesn't actually own the property now. You can't place a lien on property the debtor does not own.
You need to be aware that you can't place liens on properties unless you know for sure that you have a right to do so. If you mistakenly place a lien on someone's property, some jurisdictions can penalize you for taking that action. So be careful.
Interestingly, Sam recently had a case where a landlord had failed to pay a tenant back his interest on an apartment lease. The tenant sued the landlord and won a judgment. The tenant placed the lien on the landlord's building and eventually the landlord ended up paying off the lien when he sold the building. This is a situation where it was clear what the landlord owned and what the tenant could lien.
With a judgment in hand, you can find out what assets the debtor might own, including what he might earn from his job, and with the help of an attorney, figure out the best way you can get repaid. You've indicated that your debtor doesn't have assets to repay you, so you need to be careful where you spend your own money in trying to collect the debt. No sense throwing good money after bad in this case, unless there is a good chance you can collect.
Otherwise, you'll have to sit and wait and make sure you keep your judgment alive with the hope that the debtor comes to own property that you can then lien and force the debtor to pay what he owes.
This is a good lesson for anyone who is a tenant or landlord, or anyone who owns property. If they get into legal trouble and their creditor gets a judgment against them, that judgment can come back to haunt them years later.
Ilyce Glink is the author of “100 Questions Every First-Time Home Buyer Should Ask” (4th Edition). She is also the CEO of Best Money Moves, an app that employers provide to employees to measure and dial down financial stress. Samuel J. Tamkin is a Chicago-based real estate attorney. Contact Ilyce and Sam through her website, ThinkGlink.com.