Sometimes a judgment debtor will not repay your judgment, yet they own real estate property. Why not just have a Sheriff sell their real estate to satisfy your judgment? This is one of those things that sounds cheaper, easier, and more logical in theory, than it turns out to be in the real world.
If all the stars align, you can pay a Sheriff, and either the judgment debtor will settle with you, or their real estate property might get sold, which may get you paid. In the actual world, often that pesky little thing called reality; gets in the way of selling your judgment debtor’s real estate, especially the home they live in.
This article is my opinion, and not legal advice. I am a judgment broker, and am not a lawyer. If you ever need any legal advice or a strategy to use, please contact a lawyer. The first step to sell a judgment debtor’s property is to record a property lien on their real estate, and then get a writ of execution for the sale of that property. Here are some things that can get in the way of selling a judgment debtor’s home or other real estate at a Sheriff’s auction sale:
1) The laws of your state. Many states have exemption laws and special requirements. In California, recorded property titles are presumed to be correct and truthful. However, they can be rebutted. The California laws that apply are Evidence Code section 622 (conclusive presumption), Evidence Code section 630 (various rebuttable presumptions may apply), Evidence Code section 660 (various rebuttable presumptions may apply), and CA Codes (civ: 678-703). Evidence Code section 662 is the big one because it requires clear and convincing proof to rebut it. It trumps the community property presumption too.
2) The judgment debtor’s equity situation. If the judgment debtor’s property has no equity, it makes no economic sense to attempt to sell it, because the previous first purchase money property lenders get paid first.
3) It takes a lot of paperwork and costs a lot of money to sell a judgment debtor’s real estate property. Because of the complexity; it is a good idea to pay a lawyer to get this done.
4) The judgment debtor can file for bankruptcy protection at any time, even if they have no chance for success, simply to delay things and run up more costs for the judgment creditor.
If the judgment debtor owns more than one property, especially commercial property, most of their exemptions and protections disappear. If you try to sell a property that is not the judgment debtor’s primary residence, there is a better chance of you getting paid.
Of course, sometimes just starting a Sheriff sale of your judgment debtor’s real estate gets your judgment paid. Another reason to hire an attorney to sell a judgment debtor’s property, is to show the judgment debtor you are serious, and intend to follow through and sell their property. If the judgment debtor settles with you, or for any other reason, the creditor may call off a Sheriff sale at any time.
If you are going to try this, your local law library will have books with example procedures and forms. Ask your Sheriff’s real property Sheriff sale department. You will probably need to buy a litigation title report which shows the lien priorities.
Even if it does not make sense to sell your judgment debtor’s real estate now, who knows what the future will hold. Maybe they will legalize hemp one day (also called pot) which would really help our economy, I sure do not see many other good ideas out there, that would do as much good for our economy. Rising home prices are sometimes good news for judgment creditors.
Even if you cannot sell your judgment debtor’s property now, record and maintain those property liens, because you never know when recording a property lien might one day pay off.