Thursday, January 2, 2014

Mere Judgments - More Of A Problem Than You Think?

Mere Judgments - More Of A Problem Than You Think?

Published on January 2, 2014 by: Ian M. Falcone


O.C.G.A. §9-12-80 states:  "All judgments obtained in the superior courts, magistrate courts, or other courts of this state shall be of equal dignity and shall bind all of the property of the defendant in judgment, both real and personal, from the date of such judgments except as otherwise provided in this Code."  Notice, that the statute says "from the date of such judgments."  It does not say "from the entry of a writ of fieri facias."  Thus, in Georgia, it appears that a mere judgment constitutes a lien on all of the judgment debtor's real and personal property from the date of its rendition.  (See In re Andrews (13-40491 MDGA) discussing In re Tinsley, 421 F. Supp 1007, 1008 (M.D. GA. 1976), aff'd 554 F. 2d 1064 (5th Cir. 1977).

However, the Georgia recordation statute (O.C.G.A. §9-12-86) states, in relevant part, "No judgment . . . shall in any way affect or become a lien upon the title to real property until the judgment is recorded in the office of the clerk of the superior court in which the property is located . . . and is entered in the indexes to the applicable records in the office of the clerk."  This would appear to be in direct contradiction to the Tinsley opinion.  In fact, the Court in In re National Service Direct, Inc. (National Service Direct, Inc. v Anderson 2005 WL 3465716 (Bankr. N.D. Ga 2005) cited Tinsley when it concluded that a "judgment must be recorded in the General Execution Docket in the county where the real property is located to attach to any real property of the debtor."  The Georgia Supreme Court has subsequently explained that the recordation statute protects only third parties acting in good faith and without notice.  National Bank of Georgia v. Morris-Weathers Co, 248 Ga 798 at 799 (1982).

Thus, the correct rule is that "[A]n unrecorded judgment is valid and enforceable between the judgment creditor and the judgment debtor under the effective date statute, O.C.G.A. §9-12-80.  Recordation of the judgment on the general execution docket is the means of perfecting the lien of the judgment against real property, but the lack of recordation "does not mean that the judgment does not exist."  Watkins v. Citizens and Southern National Bank, 163 Ga. App. 468, 294 S.E. 2d 703, 704 (1982) (quoting National Bank of Georgia v. Morris-Weathers Co., 248 Ga. 798, 800, 286 S.E. 2d 17 (9182).  Thus, a lien exists prior to recordation, but it is not perfected until recorded on the general execution docket.  Simply put, the absence of recordation does not eliminate the existence or effect of an unrecorded judgment against the interest of a judgment debtor, as opposed to the interest of third parties, in the property.  See Andrews v. Adcock (In re Andrews) (13-40491  NDGA).

What does this mean to debtor's counsel?  It means that you may need to file a motion to avoid a judgment lien pursuant to 11 USC 522(f) even if no writ of fieri facias has been filed.  This, of course, raises new due diligence concerns.  While most lien searches will reveal the existence of a fi. fa., not all judgments will show up on a credit report.  In fact, even a comprehensive background search (such as those provided by Lexis-Nexis or Westlaw) will only return judgment from participating courts.  Are you entitled to rely on your client's representation that there are no judgments?  Are you required to conduct a search?  Do you have to physically visit all local courthouses if they do not participate in online searches?  There are no easy answers, just questions.  But one thing is for sure, that judgment without a fi. fa. may be more of a problem than you think.









2 comments:

  1. Twitter is highly authoritative dynamic social networking website that is well-known for interactioninthe Judgment lienworld You write your views and other business related advertisement over Twitter,
    those spread like a fire in fraction of seconds.

    ReplyDelete
  2. Australia needs Good Lawyers like you. Keep sharing your experiences and knowledge Sir.Sydney Probate Lawyers is a boutique law firm based in the heart of Sydney’s CBD, specialising in Probate Law. Probate Lawyers Sydney

    ReplyDelete