Importance of Recording Judgment Liens - Case Study

June 3, 2024

We were recently contacted by a Judgment Creditor who had obtained a Pennsylvania judgment in 2012. The Judgment Debtor attempted to have the judgment opened or stricken but this was denied way back in 2012. The Plaintiff had domesticated his judgment to all of the states where the Defendant owned real property, including Florida, Massachusetts, and New Hampshire. In 2024, the Debtor still owned vacation or rental real estate in New Hampshire which looked relatively exposed, worth $376k. There was a mortgage from 2002 for only $100k which was probably close to paid off, making this collection look promising. We learned that the Plaintiff had retained counsel to file a lawsuit to domesticate and enforce the foreign judgment in New Hampshire in 2013. Creditor’s counsel had obtained a pre-judgment writ of attachment against the property, to ensure that it wasn’t sold or otherwise transferred pending the action to enforce and recognize the foreign judgment (this was prior to New Hampshire’s passing of the Uniform Enforcement of Foreign Judgments Act, which allows a much more streamlined method of domestication and enforcement of foreign judgments as opposed to requiring an entirely new lawsuit where the Plaintiff must sue to get the sister state to enter a new judgment on the foreign judgment. I know, wrap your head around that…). This was great work by the Plaintiff’s attorney because often times, a debtor will immediately do a fraudulent transfer of real estate when alerted to pending collection activities targeting the real estate. When the Writ of Attachment was recorded with the county recorder’s office in July, 2013, this created a valid lien on real property to the extent of the judgment value, $300,000.

Two weeks later, the Plaintiff obtained a default judgment recognizing and enforcing his Pennsylvania judgment as a valid New Hampshire judgment, which allowed him to begin seizing the Debtor’s assets in New Hampshire. Great, right? Unfortunately, the judgment itself that the Plaintiff had just obtained was never recorded with the county recorder. Under New Hampshire law, to create a judgment lien on real estate, a certified copy of the judgment must be recorded with the registry of deeds of the county where the real estate is located, and the Plaintiff must also record an affidavit stating that copies of the judgment lien documents had been mailed to the Defendant. Neither of these things had been done. When he learned this had not been done, the Plaintiff was very angry, and he had every right to be. Recording a judgment lien in any county where the debtor owns real estate should be done in every single judgment case, and any competent attorney should know this, even if they aren’t collection specialists.

More than a decade later in 2024,we learned that the judgment was never recorded, and making matters even worse, another judgment creditor had obtained a $124k judgment and had actually recorded it with the county, thus creating a valid and proper judgment lien on that property, and in doing so, liening most of the available equity in that property. The Plaintiff could’ve recorded his judgment at any time in those 10 years between 2013 and 2023, but his counsel was negligent and failed to do so. What a huge mistake!! I felt really bad for this guy because his attorney had been negligent and had put him in a bad spot – meaning he may never get paid on his judgment now.

Judgment Lien priority is important, in fact, it’s really really important. If you have lien priority, you are “senior” to any subsequent judgment liens or other liens. If you are “junior” to other lienholders, that means your judgment doesn’t get paid until all the senior lienholders get paid in full first, and there might not be enough money for all creditors at the end of the day. Being a senior creditor with a secured judgment lien can make all the difference between getting paid and never seeing a dime of your judgment.

You might be wondering “but the Plaintiff obtained and recorded that Writ of Attachment back in 2013. His lien relates back to 2013, he’s senior to the $124k judgment creditor!” This was my initial thought as well, but some quick legal research dispelled my wishful thinking. New Hampshire Revised Statutes Section 511-:55 governs the duration of certain attachments, such as a writ of attachment. The relevant NH law on this point said:

Real or personal property attached shall be held until the expiration of 6 years from the time of rendering a judgment in the action in favor of the plaintiff on which he can take execution, and, if there are several attachments, the property shall be held for the creditors in the order in which their attachments were made.

So the writ of attachment remained on the Debtor’s property from six (6) years from the date the judgment was rendered in 2013, resulting in its expiration in 2019. Even so, the Plaintiff could’ve recorded his judgment at any time between 2019 and 2023 and still would’ve had a judgment lien that would be senior to the $124k judgment creditor who recorded in 2023.

The last resort the Plaintiff might’ve had – a legal malpractice action against his own attorney for failing to secure a judgment lien and allowing the lien of his writ of attachment to lapse– would’ve been potentially viable, BUT the statute of limitations to bring a legal malpractice claim would’ve been 3 years, which expired in 2022.

LESSONS LEARNED: (1) Always record a judgment lien immediately!! (2) Exercise your rights to collect on a judgment and don’t wait a long time before contacting a competent attorney or judgment collection company to recover your money. At Final Verdict Solutions, we do extensive diligence and utilize all remedies available to collect a judgment. These types of elementary mistakes (i.e. not recording a judgment lien) are simply unacceptable when it comes to recovery of judgments.

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