Property Sold by Judicial Order - dummies

Property Sold by Judicial Order

By Alan R. Romero

In certain circumstances, property law allows a court or public officer to effectively transfer one person’s title to another person — without having the former owner sign a deed or take any other action to accomplish the transfer. Here are some of those situations:

  • Execution sale: When a person obtains a damages judgment against another, she may have the person’s property sold to satisfy the judgment. The person who wins the damages judgment may be called a judgment creditor, and the person who owes damages, a judgment debtor.

    By statute, the judgment creditor has the right to a lien against the judgment debtor’s real property in the jurisdiction; the lien is a legal right to have the property sold and the proceeds of the sale applied to the unpaid judgment.

    The judgment creditor can enforce that lien by getting a writ of execution, a judicial order to have a sheriff conduct an execution sale by auction and distribute the proceeds. The sheriff has the statutory authority to convey the title to the buyer by giving her a deed.

  • Foreclosure sale: A person who borrows money from a lender may give the lender a mortgage to help ensure repayment of the debt. A mortgage gives the lender, called the mortgagee, the right to sell real property at an auction sale if the borrower defaults on her obligations.

    In some states, a lender may conduct the sale itself, without a lawsuit, if the mortgage (or a comparable document called a deed of trust) gives the lender the right to do so. Otherwise, the mortgagee must initiate a lawsuit against the defaulting mortgagor and other affected interest-holders; then the court orders the property to be sold.

    A sheriff or other public officer conducts the sale and gives a deed to the high bidder upon tender of the purchase price. The proceeds of the foreclosure sale are used to pay off the unpaid debt.

  • Tax sale: If a real-property owner doesn’t pay the property taxes on the land, the tax officer or other public official can sell the land at auction, give a deed to the high bidder, and apply the proceeds of the sale to the unpaid taxes.

    In some states, the deed conveys title free from any encumbrances, meaning that anyone else who has an interest in the land, like an easement, a mortgage, or a lien, will lose her interest when the land is sold for nonpayment of taxes. Such interest holders can protect their interests, however, by paying the taxes or redeeming the land from the tax sale.

  • Partition sale: Two or more people may share ownership of property. Except when the co-owners have a particular form of co-ownership called a tenancy by the entirety, any co-owner can ask the court to divide up the property in an action called partition.

    If possible, the court will physically divide the property among the co-owners, giving each co-owner sole title to a portion of the property. Otherwise, the court will order the property sold at auction and the proceeds of the sale will be divided proportionally among the co-owners.

  • Judicial orders: A court’s judgment concerning ownership of real property may have the effect of transferring title, without the former owner signing a deed or taking any other action.