Title Tale: Judgment Liens: Why Your Borrower May Have to Pay Even When They Swear They Shouldn’t

Written by: Mylene Marcelo, Title Manager/Title Officer

In a recent file, a borrower came back after closing upset that escrow paid off two judgments. His protest? “I’m not supposed to pay these!”

Well, here’s the naked truth: He sued, he lost, and the court ordered him to pay. Those judgments didn’t just vanish into thin air- they got perfected and latched onto his real estate like barnacles on a ship. Since the judgments showed up in the title commitment, escrow had to clear them before closing. He reviewed, signed off on it and agreed to the payoff and then tried to backpedal later. Too late.

Whether a judgment sticks to the subject property depends on state law. Each state set the rules for how a judgment becomes “perfected” and how long it lasts.

Let’s take a tour of some states for example.

In California, a judgment only attaches to real property once an Abstract of Judgment is recorded in the county where the property sits. Think of it like dating. You can’t call it official until you “go public” on social media. Here, “going public” means recording at the county.

Once recorded, the clock starts ticking from the date of the judgment, and it’s enforceable for 10 years and renewable.

Grand Canyon State Arizona is a dual-checkpoint perfection state. It makes you do both: file the judgment in court and record a certified copy in the county recorder’s office. If you only take one step, the judgment is like a half-baked cake, and it won’t cloud title. Once perfected, it is attached to the real estate property in the county where the debtor owned and enforceable for 10 years and renewable.

In the Sunshine State Florida, a judgment doesn’t automatically stick. You’ve got to record a certified copy of the judgment in the county’s official records and enforceable for the 10 years and renewable.

And the Garden State New Jersey keeps it simple. A Superior Court judgment will automatically attach statewide to any real estate the debtor owns. No extra filings, no running around with copies. Think of it as the “super-glue” state. Once you lose it, it sticks everywhere, and it lasts for 20 years from the date of entry. Before the 20 years run out, the creditor can apply to the court to revive or renew the judgment.

A lender might use a tool such as a Fraud Guard which flags lawsuits or complaints, but what really matters for us is perfection. A simple lawsuit filing doesn’t cloud title; only perfected judgment does. If a judgment isn’t perfected under the state law, it won’t attach to real estate and it won’t appear in the title commitment. That’s why we don’t list “purported judgments”, and only enforceable liens make it onto the commitment. Borrowers may argue otherwise, yet state law and their own signatures leave no room for debate.

For further details or deeper state-specific guidance, please contact your favorite Escrow Officer to inquire with our underwriting department.