Judgment lien

A judgment lien is a lien on real property created by docketing a money judgment. It attaches to the debtor's real property in the county where the judgment is docketed.

It is one of the most common causes of clouded title in Minnesota, largely because it is easy to forget about.

How it attaches#

A creditor obtains a money judgment. The judgment is docketed with the district court, and on docketing it becomes a lien on the debtor's real property in that county.

Docketing in another county extends it to property there. A judgment entered in Hennepin does not automatically encumber a cabin in Cass until it is docketed in Cass.

Ten years#

Under Minn. Stat. 548.09, the judgment survives and the lien continues for ten years after its entry. Child support judgments carry their own renewal provision.

Ten years is the detail that matters. A dispute settled and forgotten in year one produces a lien that is still live in year nine, and it surfaces when the property is sold or refinanced — at which point it has to be dealt with before closing.

Where it shows up#

At a title search, on a sale or a refinance.

The title company finds it, the closing agent requires it satisfied from proceeds, and a seller who had forgotten the judgment discovers it as a deduction on the settlement statement.

That is the ordinary case and it is manageable. The harder cases are where the judgment creditor no longer exists, where the debt was paid but no satisfaction was recorded, or where the judgment is against someone with a similar name.

Name matches#

A frequent and irritating problem.

County indexes work on names. A judgment against a person with a common name appears as a potential encumbrance on every property held by anyone with that name, until it is cleared up.

The remedy is usually an affidavit of identity confirming that the property owner is not the judgment debtor. Routine, inexpensive, and it needs to be done rather than argued about.

Clearing one#

Satisfaction. Pay it, obtain a satisfaction of judgment, and record it. Paying without recording leaves the record showing an unsatisfied judgment, which is the same problem for the next title examiner.

Expiry. After ten years the lien ceases, though the record may still need clearing.

Bankruptcy. In some circumstances a judgment lien impairing an exemption can be avoided, which is a specific procedure rather than an automatic consequence of a discharge.

In a foreclosure#

A judgment lien junior to the foreclosed mortgage is extinguished by the sale.

The creditor's remedy is redemption — recording a notice of intent to redeem and redeeming in priority order after the mortgagor's period expires. Most do not, which is why most junior judgment liens simply disappear at a sheriff's sale.