Winning a money judgment in court is oftentimes only the first battle in the longer war of collecting a debt. If the debtor still is unable or unwilling to satisfy the debt, you may need to file for an Abstract of Judgment, a legal instrument that will place a lien on any real property the debtor owns or attempts to purchase in the future.
An Abstract of Judgment gives you a powerful means of collecting a debt, as it prevents the debtor from buying, selling, or refinancing real estate without first paying you back the money he or she owes, plus interest. If you want to harness this debt-collection power, however, you must get the details right.
Mistakes prove costly
A debt collection dispute that came before California’s Second Appellate District Court underscores the importance of accuracy and attention to detail when filing for an Abstract of Judgment.
The creditor in this case, LBS Financial Credit Union, obtained money judgments against the debtor, a man named Guillermo Guerrero. LBS recorded two Abstracts of Judgment against Mr. Guerrero, but made a crucial mistake in doing so. In the legal filings, they identified him as Wilbert G. Guerrero.
Mr. Guerrero went on to sell the property to a third party who financed the purchase through another lender. The original creditor, LBS Financial, informed the buyer and their lender of LBS’s ownership interest in the property and demanded payment. Those parties, in turn, sued LBS for quiet title and declaratory relief. The dispute eventually went to a trial court that sided with the new buyer and their mortgage lender. Those parties, the court reasoned, could not reasonably be expected to be aware of an Abstract of Judgment that was improperly recorded. The appellate court affirmed the trial court’s decision.
Careful execution pays off
California courts have consistently reasoned that the burden lies upon the creditor to accurately file information and that subsequent buyers cannot be expected to find liens and judgments that are not locatable by a reasonable search.
If you are seeking to collect a debt in California, a single mistake can derail your collection efforts and leave you with nothing but legal bills. By getting the details right, you can rest assured that your debtor will not be let off the hook due to a preventable mistake.