What if a 72-year old judgment debtor owns their house outright, however there's a state tax lien recorded on their property? As an example, their home having land is worth about three hundred thousand, the judgment is worth $30K, and the prior tax lien is for forty thousand. This article is my opinion and is not, a legal opinion. I am a judgment broker, and not a lawyer. When you want a strategy to use or legal advice, please contact an attorney. A cheap and passive procedure is to record a real estate lien and just remain patient. Getting paid back is not guaranteed. As an example, the judgment debtor could get a reverse mortgage on their real estate, apply for bankruptcy, or add somebody else as as additional owner of their real estate. On every judgment collection effort involving a judgment debtor's real estate, the available equity is an important consideration. Creditors should consider buying a title report from a reliable title company or an online company such as Fidelity National Title or DocEdge. A typical judgment collection procedure is recording a lien, and paying the Sheriff to sell your debtor's property at their auction. The majority of creditors should retain an attorney to show them how property levies work in the county where their debtor's property is located. Sheriff property auctions cost a lot, and they might cause your debtor to apply for bankruptcy. And, in some states, there's laws which give extra exemptions to older debtors. Despite this, it remains a popular choice for trying to collect judgments. All prior tax liens must get completely repaid. Mortgage companies make sure taxes are paid, to prevent tax lien buyers from selling real estate. Theoretically, tax lien owners get top priority over the majority of other liens, and don't need to take any action except for just wait to get repaid. Sometimes a tax lien holder can have their county foreclose and get the real estate free and clear of the majority of other liens including judgment liens, and profit from the equity in the property. One reason investors buy tax liens is because a few of them will be tied to real estate having lots of of equity even after paying off any other creditors and the tax lien owner, including the interest owed. Of course, the majority of tax liens are on properties with little or no equity. For all deeds and liens, recording date priorities are often important. There's two types of deeds, Grant Deeds and Deeds Of Trust. Grant Deeds (quit claims, etc.) transfer real estate from one entity or party to another. Deeds of Trust are loan and mortgage instruments that protect the interests of the lender. Deeds of Trust are most often linked to a promissory note or loan agreement. A deed of trust is a security instrument, and the note is the document which forms the loan document listing the property that the deed of trust secures. Instead of a Sheriff's auction levy of your debtor's property, what other tactics could be possible? With certain situations, it might be possible to structure some kind of deal to get possession of the deed to their house, to satisfy the judgment with no out-of-pocket expense for the debtor. Although not easy to accomplish, one potential idea is to arrange some type of arrangement so you get ownership of your judgment debtor's home in exchange for letting them continue to stay in that house for as long as they want. Owners with a note secured by a deed of trust will probably be able to sell their note at a discount to a buyer for cash upfront. With your $30K judgment, a $40K tax lien, and a three hundred thousand dollar real estate value, there is plenty of equity for a deal that makes everyone happy. It all depends on how you structure and negotiate the deal with the debtor, and then subsequently with prior lien holders, and the new investor. Assuming you are successfully able to structure a deal which is acceptable to all, you will get a note or some similar obligation that can be transferred. At that point, you can probably interest an investor who will to pay you for it. Different than the majority of judgments where there are usually no guaranteed available assets to pay them; senior-position notes secured by real estate having lots of of equity, can sometimes be sold for a substantial amount of cash upfront. Mark D. Shapiro of: http://www.JudgmentBuy.com - Your fastest and easiest free way to find the right professional to buy or recover your judgment.
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