Table of Contents Page Home Page

What's the difference between a lien and a judgement?

I’m considering buying a piece of property from a man I’ve known for many years. I understand that he has a judgment against him because he never repaid a loan from his brother-in-law who later became his ex-brother-in-law. His brother-in-law sued him right after the divorce and won. My friend said that, despite this, there is no lien on the property and that I could easily buy it. What is the difference between a lien and a judgement?

ANSWER:

Land has been used as a security for debts for hundreds of years and is usually designated as such when the lending agreement is formalized. This is apparently not the case here since it sounds like the legal action did not involve the land and was most likely an action against your friend for nonpayment of an unsecured debt.

When it is apparent that a loan or other financial obligation is not likely to be paid, as it appears to have been in this situation, the person who is demanding the repayment or fulfillment of the obligation sometimes seeks a legal remedy to prove his debt and seek repayment.

A judgment is a decree of a court of competent jurisdiction declaring that one individual (debtor) is indebted to another (creditor). The judgement fixes the exact amount of the debt. In some cases, the verdict alone is not sufficient to establish a judgment. A second step may be required to do so. Perhaps this step was not taken and your friend’s brother-in-law only thinks he has a judgment.

A lien is a claim which one person has upon the property of another as a security for a debt. It is actually a right that the creditor has under the law to have the debt satisfied out of the debtor’s property.

The effect of a valid judgment (with all the required steps having been met) is that a lien immediately attaches against the debtor’s real estate in the county where the judgement is recorded. If the creditor, your friend’s ex-brother-in-law, doesn’t have a claim reduced to a judgment, your friend can sell or mortgage his property. If your friend’s ex-brother-in-law has reduced his claim to a judgment, a lien may exist against the real estate. This means that you as the purchaser would take the property subject to the lien and the creditor may have the right to force a sale of the property to recoup the amount owed.

You should certainly investigate this situation before buying the property. Your friend cannot give you good title to any part of the real estate owned by him if there is a lien. No smart buyer would accept title thus encumbered, nor could the creditor be compelled to release any part of your friend’s real estate unless the full debt has been paid.

This information is not intended as specific legal advice to anyone and is based upon facts that change from time to time. Individuals should seek legal counsel before acting upon any matter involving the law.

Back to the top of the page