How to Collect a Small Claims Judgment with a Levy on Property - dummies

How to Collect a Small Claims Judgment with a Levy on Property

By Judge Philip Straniere

Levying on property means attaching the property to satisfy a small claims judgment. You have to identify the property, and the defendant has to own it free and clear. If you want the marshal to take the defendant’s car, be sure the car isn’t financed, because even if you can get the property sold, the finance company gets paid first and there may be no money left for you.

Likewise, trying to grab office equipment at the defendant’s business may be a problem for the same reason: It may be leased or financed. The marshal generally isn’t going to want to get into the middle of a dispute over ownership of the property, particularly because if he seizes something that isn’t owned by the defendant, the marshal may be opening himself up to being sued.

If you want to take property from the defendant’s house and have it sold, you have a similar problem. First, if the property is jointly owned with the spouse and your judgment isn’t against the spouse, it’s unlikely that you can get it sold. Also state laws may prohibit the sale of certain necessary items such as a stove or refrigerator.

Hopefully, you can find some piece of personal property the defendant owns — such as his baseball collectibles — and the marshal can sell the items at auction for you. The defendant may also own stocks and bonds or other personal property readily convertible to cash to pay you with.

If the defendant owns real estate, you have an excellent way to get paid at some time in the future. First, you must realize that just because you have a judgment against the defendant doesn’t necessarily mean you have encumbered any real estate he owns.

When property is encumbered, it means that the person doesn’t own it free and clear —liens on the property have to be paid before the property can be sold.

The most common encumbrance is a mortgage or real estate taxes. You may have to go to the county clerk and ask to have your judgment recorded against all real property the defendant owns.

Because this entails additional paperwork, the small claims court may charge an additional fee to issue a certification or transcript of the judgment, which is a document to take to the county clerk to record against the real property in the defendant’s name.

You probably have to pay a fee to get a certification or transcript of the judgment from the clerk of the small claims court. You then take the certification to the county clerk and pay another fee to record your judgment against any real property the defendant owns. Someday the defendant will go to sell his land, and voilà, your judgment will turn up as a lien against the property.

You have to be paid the judgment amount and any statutory interest accrued on it to clear the lien and give the property a clear title. Statutory interest is probably at a higher rate than you would earn if the money was in the bank.

How do you find out what real property the defendant owns? Well you can go to the county clerk and search the land records to see if any real property is registered in the defendant’s name or you can hire a title abstractor, someone who checks out real property records for a living and will be able to locate property owned by the defendant.

A title abstractor is insured against malpractice if he makes a mistake. You won’t have such protection, and if you improperly place a lien against the wrong property, you can be sued for impairing title to the property — sometimes called slander of title.

For instance, you want to place a lien on the property of the defendant John Smith; however, there’s a good chance there’s more than one John Smith in your county. If you tie up the wrong one’s property, you have a problem.

If the defendant is a landlord, you can levy on the rent payments he receives from his tenants. Payment of the monthly rent would go to the marshal first and the balance, after deducting his fee, goes to you each month, similar to a wage garnishment.