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A judgment lien is a limitation placed on the title of property as a result of a court judgment. A judgment is a decision made by a court that a defendant owes money to a plaintiff. If the defendant cannot pay the money, a judgment lien can be placed on the defendant's home or other tangible assets.
When a person is sued in court, the individual has the opportunity to present a case and defend himself. If the defendant loses the case, the judge or jury generally provides for a monetary award for the plaintiff. This judgment must be paid by the defendant and the judgment is listed on the public records section of the defendant's credit report within the United States.
Often, a defendant is unable to pay a judgment in full. The court can then do one of several things depending on the situation. The court can seize the defendant's assets for a forced sale or a sheriff's sale, it can garnish the defendant's wages, or it can place a judgment lien on the defendant's property.
Usually, a court will not seize and sell assets unless the judgment is a default judgment on a secured asset. For example, in a foreclosure action, the court will permit the bank to take and sell the defendant's home after the bank sues for foreclosure. This is common in such a situation because the home is collateral for the debt and so seizure and sale is appropriate.
In many situations, however, the court will instead place a judgment lien on property instead of seizing and selling the assets. This is a notation on the title of the property which limits the defendant's right to sell. When a judgment lien is attached to a property, proceeds from the sale of the property must go toward satisfying the judgment immediately upon the sale.
The lien will be removed from the property if and when the defendant pays the required damages from the judgment in full. Often, it is difficult for a defendant to sell a property that has a lien on it, as most banks will not permit a mortgage for a property unless it has clear title, and title searches are almost always performed before a property can be sold. Title insurance companies also check to determine whether a property has liens on it, and will provide a guarantee to pay any judgments or damages associated with the property if the title turns out after-the-fact to have a lien placed on it.
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