The filing of an Abstract of Judgment is often the best method that a judgment creditor has to collect a money judgment. The abstract will frequently linger over the debtor for years, and will sometimes follow that debtor to the grave, leaving the debtor’s heirs to deal with the mess. We have observed the frequent occurrence that, many years down the road, a valid judgment will be collected due to the dogged persistence of the loyal and dutiful abstract of judgment.
An abstract of judgment that has been properly indexed and recorded can be a powerful tool in the tool belt during the sometimes difficult task of collecting a judgment. The Abstract creates a lien against the debtor’s nonexempt real property in the county in which the abstract is recorded, pursuant to
Tex. Prop. Code § 52.001. The lien continues for ten years from the date of recording and indexing, as long as the judgment does not become dormant, and the judgment may be renewed. Tex. Prop.Code § 52.006.
The judgment by itself creates no lien, it is the proper filing and indexing of the Abstract which creates the lien..C.I.T. Corp. v. Haynie, 135 S.W.2d 618, 622 (Tex. Civ. App.—Eastland 1939, no writ).
While the judgment lien does not attach to the debtor’s personal property, it can create a genuine problem for the debtor with respect to any real property the debtor may own or come into ownership of later. The judgment lien also attaches to after-acquired real property of the defendant. Tex. Prop. Code § 52.001.
And while the debtor’s homestead is exempt, a recorded judgment lien against the owner of homestead property will nonetheless attach to the property when it ceases to be his homestead, if it is still owned by him. Walton v. Stinson, 140 S.W.2d 497, 499 (Tex. Civ. App.—Dallas 1940, writ ref’d). So then, the Abstract and lien can still create a cloud on the title which may have an impact on the debtor’s ability to sell the property. A debtor may request removal of the lien as to the homestead, and the Texas Property Code sets out requirements for a release of record of lien on homestead property in Tex. Prop. Code § 52.0012.
When the debtor dies, his or her property will vest immediately in the heirs. Any such property, including real property, is subject to payment of his or her debts. Tex. Prob. Code § 37. A properly filed and indexed abstract of judgment creates a lien against the inherited real property. An executor or administrator can sell the property free of the lien, however, to satisfy debts of the estate. Woodward v. Jaster, 933 S.W.2d 777, 780–82 (Tex. App.—Austin 1996, no writ).
The filing of an abstract of judgment is a great way of putting the public on notice that the judgment is in existence. It will let the whole world know that the property attaches to any non-exempt real property of the debtor. While debtors would often like to ignore the fact that an abstract has been filed against them, they overlook the practical implications to title companies who want to see a clear title. Title companies search for abstracts of judgment precisely to determine if they should collect from the proceeds of sale to satisfy the debt. This creates a huge dilemma for debtors who are trying to sell any such encumbered property. And, even though a judgment lien does not attach to, and does not constitute a lien on, a judgment debtor’s homestead, it is usually difficult for the debtor to persuade the title company to disregard the existence of the judgment. Rarely if ever do closings go forward under such circumstances. Title companies are in the business of risk management and will not like it if the liens are not cleared.
We are Debt Collections lawyers in Fort Worth, Texas, skilled in business litigation, and we represent companies who need to secure payment on their commercial accounts. The Abstract of Judgment will be one of several tools we will employ to collect these debts for you.
Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Fort Worth, Texas collections attorneys in Tarrant County who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.