I am not a lawyer, I am a judgment referral expert (Judgment Broker). This article is based on my experience in California. Laws vary in each state, and nothing in any of my articles should ever be considered legal advice. This article is my opinion about some judgment enforcement procedures for judgments against real estate brokers and agents.
How one enforces judgments usually depends on the debtor. When the judgment debtor is a real estate agent or broker, there are specific strategies one can use because of the nature of their business.
First, visit your state’s Department of Real Estate (DRE) web site (In California, www.dre.ca.gov) and search your judgment debtor’s name. If they currently have an active license, you should be able to find the mailing address where their license is currently registered.
If your judgment debtor is a real estate agent, check their activities. Find your agents history of listings, pending sales, and sold properties. Your friend might even be “looking for a home” and get your debtor to spill lots of useful information.
Successful garnishing of a real estates wages have been accomplished by serving a notice of the levy on the real estates broker. To do this, check with the Bureau of Real Estate, formerly called the Department of Real estate. Assignment orders usually work on the brokers the (real estate salesperson) judgment debtor works for.
If the judgment is against the real estate broker, then it is much more difficult, because they work for themselves. You have to locate an on-going escrow and get an assignment order on that transaction. Rinse, lather, repeat – until the judgment is satisfied. Usually, the broker will have a favorite title company that handles their escrows.
If your debtor is a broker, they may have two addresses registered (their primary and satellite office). If they are not a broker, the Bureau of Real Estate web site will list which broker the judgment debtor has their license registered with. The Bureau of Real Estate will list at least a business address. If your judgment debtor is a broker with two addresses, there is a good chance that one of the two addresses may be their home address.
You can also check with the local area chapter of the Association Of Realtors (AOR) that almost all realtors belong to. That membership allows them to access the County’s MLS (Multiple Listing Service) and state realtor forms and contracts. Together, the DRE and the OAR, should show you at least the debtor’s business addresses.
Unlike the average judgment debtor, most realtors and brokers aggressively pursue getting their names and businesses “out there” for marketing purposes. You should be able to find them or their own web sites or local MLS sites, and see which listings they have. If any listings are noted as “in escrow” or “pending” then you know that something is in the process of being closed (assuming the financing comes through).
Call the (judgment debtor) broker or agent’s office, and tell them that you own property near them, and are evaluating a sales offer from another party. They will try to get your listing, but you quickly explain that it is a FISBO (For Sale By Owner), and that they were recommended to you as a good source for a referral to a quality title company. Ask them which two companies they like and use. Then ask for the name of the title officers they use at each of the title companies.
With their own referrals, there is a good chance that you can find out which title or escrow company, and which title officer, is handling their pending transactions. Then send, or have them served your demand, for that escrow payment, along with your assignment order for any commissions that are scheduled to be paid to your judgment debtor. (Getting and serving an assignment order is beyond the scope of this article, in California, start with CCPs 708.510 to 708.560, or see my other articles.)
Try to get the judgment debtor’s escrow company to keep you posted on any new escrows being opened up by the judgment debtor. You examine the judgment debtor at a debtor examination, and ask about their active escrows, and then bring them back several times, and each time ask about their then-current active escrows. If the judgment debtor has assets and the judgment is large, consider bringing in receiver to run their business to get you paid. In California, a judgment debtor exam creates a one-year “silent lien” on all their personal property, which might make you a secured creditor if they later file for bankruptcy protection.
Next, beyond an assignment order on debtor’s escrow payments, these people always drive decent cars to impress their clients. Their bank accounts yo-yo up and down, so you will need to monitor them to get a good hit. Look for any rental properties they own or manage, because this is also a good candidate for an assignment order. If they have investment clients, the debtor will not want you doing a 3rd-party OEX on them, so doing so might make the debtor find their checkbook.
If there is any doubt about which title officer to serve, call the title company and ask for the name of the person in charge of that office, and send (or have them served) your demand and the assignment order. If you have a friend who is a real estate appraiser, they will have access to the MLS. They will be able to tell you which title company is handling the escrow for any property that is pending a sale.
If the judgment debtor does not have any listings that show “pending” then have your appraiser buddy check the MLS updates once in a while, and when your judgment debtor pops up, have them contact you, so you can have an assignment order sent or served. It is a good idea to take your appraiser out to dinner or send them a bottle of wine, because appraisers are valuable.
If your judgment debtor brokers or sells commercial properties, there are some additional revenue sources that you may be able to reach. Commercial agents and brokers get an income stream when they lease a property to a tenant for the life of the lease. The money is paid to them monthly, and it is usually a built-in percentage of the lease terms. Its paid by the tenant to the brokerage, who then passes a net amount to the property owner.
If there are properties that the brokerage manages, you can determine if the judgment debtor is the broker or agent of record. If so, then you can have the tenants served with a turnover order or an assignment order.
1) Call the brokerage the JD works for. The listings belong to the broker, not the agent.
2) Ask what escrow companies the brokerage uses. I would not speak with the broker, directly, at this point, but some clerical person there.
3) Ask about the status of the status of the escrows. Often, this information is freely disseminated by clerical personnel, and even other agents. Usually, the agents will go through a particular escrow company they like.
4) Serve each escrow company you can find that has any relationship with the brokerage and/or the agent. It has to be done with personal service. You need a certified copy of each order you serve.
5) Serve the homeowners (sellers), as they ultimately control the sale.
6) Serve the broker, personally with the Order. Any monies that are pending in escrow for commissions, etc. go to the brokerage; the broker then cuts a check to the agent.
7) Call the broker to follow up. Your actions might mean the debtor real estate agent will get fired. However, some of their sales may be pending, and the broker is going to take their cut and not want trouble, because they have their license to protect.