subject: Breathing Life Into Your Texas Judgment Lien [print this page] Successfully collecting your Texas Judgment necessitates a masterful use of appropriate post-judgment remedies. The most effective starting point is by producing a secured interest in your debtor's assets with an appropriately created lien.
Creating a Judgment Lien
A lien is a claim against a person's possessions with respect to repayment of a financial debt. Your court order saying the defendant is obligated to repay you a specified sum of money is a debt because the defendant is obligated to pay you, the creditor, a specific amount of money. But, the order for payment does not automatically establish a secured interest in the defendant's properties.
You need to take affirmative action to use your judgment to generate a security interest in your defendant's property with the debt your order creates. When you have effectively established security interest based upon your judgment, it affixes to all of the defendant's non-exempt real property in the county where you record it.
Affixing a judgment lien to a debtor's landholdings is generally as easy as filing a document called an "abstract of judgment." An abstract is essentially a summary of the order you have against the defendant. It tells how much the defendant is obligated to repay you, together with court costs, attorney's fees and interest. You simply file it with the county clerk in each county where your defendant owns real estate to establish a secured interest on that realty.
For instance, if your the defendant possesses realty in Dallas and Houston and you record an abstract in Harris County but not in Dallas County, you affix your interest only on the land in Houston. To affix your interest to the Dallas landholdings, you must file your abstract in Dallas County.
Keeping the Judgment and Its Lien Alive
Upon filing the abstract, it is recorded and indexed in the county deed records and shows your claim to the defendant's real estate. It attaches your lien to the debtor's non-exempt realty for 10 years unless the order comes to be dormant. If it comes to be dormant, the secured interest disappears.
Your court order comes to be dormant if you do not issue a writ of execution within 10 years after the order was signed by the judge. If your order comes to be dormant, it will sacrifice its priority position in the records. It is vital, therefore, for you to keep your interest alive. You can keep it alive by:Recording a new abstract right before completion of 10 years from the date of the previous one; along withExecuting on the judgment before it comes to be dormant.The Outcome of a Judgment LienThe likely significance of the Texas judgment lien was encountered in the highly publicized case involving Pennzoil Company and Texaco in the mid-1980s. Texaco, Inc. v. Pennzoil Co., 626 F. Supp. 250 (S.D.N.Y. 1986), revd 107 S. Ct. 1519 (1987). As you may recall, Pennzoil won a huge claim against Texaco. Immediately after the judge signed that order, Pennzoil was entitled to abstract it and record it in each county in the State of Texas. By doing so, Pennzoil was perfecting its lien on all of Texaco's real property in Texas.Texaco, realizing the impact of the lien, filed suit in the United States District Court for the Southern District of New York challenging the constitutionality of Texas judgment lien regulations. Eventually, the case was appealed to the United States Supreme Court. The Supreme Court ruled that the federal courts should not be hampering the Texas judicial system. Texaco was forced to file bankruptcy to stop Pennzoil from taking further action to perfect its lien.Practical TipsRecording an abstract of your judgment is generally a cost-effective technique to ensure future collection. You should certainly think about recording it in:The county where the defendant lives.The county where the defendant works.The county where the defendant's family lives (inheritance opportunities).The county where the defendant has previously possessed property (he may attempt to invest once more).Keep a close eye on your time frames. You should keep your order and lien alive. You really should start the process of acquiring a writ of execution and a new abstract ready not later than 9 years after your initial order is signed. An early start will make certain that all procedures are complete prior to the 10 year anniversary of the judgment and lien.by: Harvey L. Cox
