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Image of Brady Bell - Bellhaven Blog Author

Written by: Brady Bell

Published Dec 4, 2024

"Doing my best to make real estate easy to understand for the average Joe."

2 min

43 sec read

Glossary Term

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Legal Actions Category Image
Legal Actions Category Image
  1. 1.What is a judgment in real estate and how does it affect property?
    2.How Judgments Work in Real Estate
    3.Types of Real Estate Judgments
    4.Impact on Property Owners
    5.Dealing with Property Judgments
    6.Common Misconceptions
    7.Protecting Your Real Estate Interests
    8.Related Real Estate Concepts
    9.Conclusion

What is a judgment in real estate and how does it affect property?

I've seen many property owners panic when they hear the word "judgment" - and with good reason. A judgment can significantly impact your real estate dealings, whether you're buying, selling, or simply maintaining ownership of your property. Let me break down what this legal term means and why it matters to you.

Judgment: A judgment is a formal decision made by a court that determines the rights, obligations, or legal outcome between parties in a dispute. In real estate, judgments often create a lien against a property owner's real estate, allowing creditors to collect debts by potentially forcing the sale of the property.

How Judgments Work in Real Estate

The path from dispute to judgment follows a clear pattern. First, someone files a lawsuit against you or your property. If they win, the court issues a judgment. This judgment can then become a lien on your property - think of it as a legal claim attached to your real estate.

These liens stick around. Most states allow judgment liens to remain active for 10 years or more, and creditors can often renew them. They sit in line with other liens, like mortgages, following a "first in time, first in right" principle.

Types of Real Estate Judgments

You might encounter several types of judgments:

  • Money judgments: From unpaid credit cards or personal loans

  • Foreclosure judgments: Related to defaulted mortgages

  • Mechanic's lien judgments: From unpaid contractors or suppliers

  • Tax judgments: Government claims for unpaid property taxes

Impact on Property Owners

A judgment against your property creates ripple effects. Your credit score takes a hit. You'll face obstacles if you try to sell - the judgment must be paid from the sale proceeds. Refinancing? Most lenders won't touch a property with an outstanding judgment. Even bankruptcy might not offer a clean escape, as some judgments survive bankruptcy proceedings.

Dealing with Property Judgments

You have options when facing a judgment:

  • Pay it off in full

  • Negotiate a settlement for less than the full amount

  • Contest the judgment if you believe it's invalid

  • Wait for expiration (though creditors often renew)

Common Misconceptions

Let me clear up some confusion I often see:

  • Judgments don't automatically expire - creditors can renew them

  • Selling your property doesn't make the judgment disappear

  • Bankruptcy doesn't automatically clear all judgments

  • Judgments can affect any real estate you own, not just your home

Protecting Your Real Estate Interests

Stay ahead of potential issues by:

  • Running regular title searches on your property

  • Learning your state's specific judgment laws

  • Consulting with real estate attorneys when needed

  • Addressing financial issues before they become judgments

Related Real Estate Concepts

Understanding judgments connects to other important real estate topics:

  • Title insurance protects against unknown judgments

  • Property liens work similarly to judgments

  • Closing processes include judgment searches

  • Property rights can be limited by judgments

Conclusion

Judgments can create serious complications for property owners. They affect your ability to sell, refinance, or maintain clear title to your property. The best approach? Stay informed and address potential legal issues early.

Need help navigating property matters? Bellhaven Real Estate's agents know how to spot potential judgment issues before they complicate your real estate plans. Contact us for guidance on your next property transaction.

Related terms

Related terms

  1. 1.What is a judgment in real estate and how does it affect property?
    2.How Judgments Work in Real Estate
    3.Types of Real Estate Judgments
    4.Impact on Property Owners
    5.Dealing with Property Judgments
    6.Common Misconceptions
    7.Protecting Your Real Estate Interests
    8.Related Real Estate Concepts
    9.Conclusion

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