Is an Old Judgment Lien Holding Up Your Real Estate Closing? What to Do with an AWOL Judgment Creditor

San Antonio Texas Real Estate Attorney Trey Wilson wrote:

It is not uncommon for an old, possibly forgotten, judgment lien to hold-up a real estate closing. Title companies will frequently object and except to closing occurring when a judgment against the Seller is uncovered during the title review process. Typically, Sellers will contact the Judgment creditor (the party in whose favor the Judgment was granted) in an effort to resolve the Judgment, thereby removing the cloud from the property to be sold, and allowing the closing to proceed.

But what happens when the Judgment Creditor is no longer around or cannot be found?

This happens more frequently than most people realize. In fact, Judgment creditors go AWOL so frequently, that a statute has been enacted to provide a procedure for resolving Judgments in favor of vanished Judgment holders.  

Section 31.008 of the Texas Civil Practices & Remedies Code relates to Payment of Unclaimed Judgments. The statute lays-out a procedure for paying the Judgment to the Court that rendered the Judgment when the location of the judgment creditor is unknown.  Under the statutory procedure, the Judgment Debtor (the party against whom the Judgment was entered) must jump through more procedural hoops than simply making payment. In addition, the debtor must do the following:

• prepare a proposed/recordable Release of Judgment citing specified information;
• send a certified letter to the Judgment Creditor (at various addresses) notifying them of the Judgment;
• send a letter to the Judgment Creditor's attorney (at various addresses) notifying them of the Judgment;
• prepare and file an Affidavit advising the Court of the attempts to provide notice to the Judgment Creditor and stating that such creditor has not responded within 15 days.

Once the Judgment creditor complies with this procedure, and tenders payment of the Judgment without offset, the Court may take action to issue documentation necessary to remove the title cloud.

A Court Order issued under Section 31.008 is generally acceptable to title companies and should allow the transaction to proceed to closing.

An experienced real estate attorney can assist with this process.