Divorce proceedings in Texas often bring about complex financial challenges, especially when it comes to the division of assets and the fulfillment of financial obligations. In the pursuit of a fair and equitable resolution, the use of judgment liens emerges as a crucial legal strategy.
This blog post explores the role of judgment liens in Texas divorce cases, shedding light on how they’re used to secure financial settlements, enforce court orders, and address property division disputes.
What are Judgment Liens?
A judgment lien is a legal claim that a creditor can place on the property of a debtor as a result of a court judgment. When a person or entity wins a lawsuit against another party and is awarded a monetary judgment, they may seek to enforce the judgment by placing a lien on the debtor’s property. This lien serves as a security interest in the property, and it can affect the debtor’s ability to sell or transfer the property until the judgment is satisfied. The creditor may eventually be able to force the sale of the property to recover the amount owed.
When is a Judgement Lien Used in a Texas Divorce Case?
Here are some common circumstances in which a judgement lien would be used in a Texas divorce case:
Property Division:
When a couple decides to divorce, they need to divide their marital assets. This may include real estate, such as the family home. If one spouse is awarded the family home but does not have the financial means to buy out the other spouse’s share, a judgment lien may be used to secure the owed amount.
Example: If one spouse is awarded the family home but owes the other spouse a certain amount to balance the division of property, the owed amount can be secured by placing a judgment lien on the home. This ensures that the owed amount is paid when the property is eventually sold or transferred.Enforcement of Court Orders:
If one spouse is ordered by the court to make financial payments to the other (such as spousal support or child support) and fails to do so, the court may allow the owed spouse to place a judgment lien on the other’s property. This lien can act as security for the owed support payments, potentially leading to the forced sale of the property to satisfy the debt.
Example: If the paying spouse owns real estate, the receiving spouse may request a judgment lien on that property, creating a security interest to enforce the court-ordered spousal support payments.Enforcement of Financial Settlements:
In some cases, divorcing couples may reach a financial settlement that includes lump-sum payments or a series of payments over time. If one party fails to comply with the terms of the settlement, the other party may seek a judgment and subsequently place a judgment lien on the delinquent spouse’s property to secure the owed amount.
Example: A divorcing couple reaches a financial settlement agreement where one spouse is required to make a lump-sum payment to the other as part of the divorce settlement. But, after the divorce is finalized, the paying spouse fails to make the agreed-upon lump-sum payment as outlined in the settlement agreement. In this scenario the receiving spouse can seek enforcement of a judgement lien through the court.Enforcement of Spousal Support Obligations:
In cases where spousal support (alimony) is ordered by the court, a judgment lien may be used to secure the payment of ongoing support. If the paying spouse fails to make the required spousal support payments, the recipient spouse may seek a judgment lien on the paying spouse’s property.
Example: If the paying spouse owns a house, the receiving spouse may request a judgment lien on that house, creating a security interest to enforce the court-ordered spousal support payments.
5. Enforcement of Child Support Arrears:
If a divorcing couple has children, and child support is ordered by the court, a judgment lien may be used to enforce payment in cases of non-compliance or arrears.
Example: If the paying parent falls behind on child support payments, the recipient parent may seek a judgment lien on the delinquent parent’s property, such as a house or land. This lien acts as security for the owed child support, and the property may be subject to forced sale to satisfy the debt.
What are Owelty Liens?
An owelty lien, also known as an owelty of partition lien, is a specific type of judgement lien. Owelty liens are typically used in the context of real estate division during divorce or inheritance situations. When property is divided among co-owners, there may be a need to equalize the distribution, especially if one person is awarded a larger share but lacks the financial means to buy out the other person’s interest.
For example, if one spouse is awarded a larger share of the marital property but cannot immediately pay the other spouse for their share, an owelty lien can be placed on the property to ensure that the owed amount is paid.
In such cases, the party receiving less valuable property may be entitled to an owelty payment, which is essentially a payment of money to make up the difference. To secure this payment, an owelty lien is placed on the property, giving the creditor an interest in it until the owelty amount is paid.
What is the Difference between a Judgement Lien and an Owelty Lien?
While judgment liens are typically associated with court judgments and debt collection, owelty liens are specific to property division and are used to secure payments needed to equalize the distribution of real estate.
6 Steps to Obtain a Judgement Lien in Texas
In Texas, obtaining a judgment lien involves a legal process that typically follows six general steps. For the purpose of our discussion, we’ll apply them to a divorce case:
Step 1: Win a Judgment in Court:
The first step is to obtain a judgment from a court. This usually happens after winning a lawsuit, or in our case, a divorce, where the court awards you a monetary judgment.
Step 2: Record the Judgment:
Once you have the judgment, you need to record it in the county where your spouse’s property is located. This involves filing a copy of the judgment with the county clerk’s office.
Step 3: Create an Abstract of Judgment:
After recording the judgment, you can create an abstract of judgment. This is a summary of the judgment that includes key information such as the people involved, the amount owed, and the court where the judgment was obtained.
Step 4: File the Abstract of Judgment:
File the abstract of judgment with the county clerk’s office in the county where your spouse’s property is located. This creates a public record of the judgment and puts a lien on their property.
Step 5: Wait for the Lien to Attach:
Once the abstract of judgment is filed, the judgment lien attaches to your spouse’s property. This means that your spouse’s property is encumbered by the lien, affecting their ability to sell or transfer the property.
Step 6: Enforce the Judgment:
With the judgment lien in place, you may have various options to enforce the judgment and collect the debt. This can include waiting for your spouse to sell the property (at which point the lien would need to be satisfied from the sale proceeds) or taking additional legal steps such as executing on the judgment through bank account garnishment or other means.
As always, if you’re dealing with any of the judgement lien situations discussed in this article, it’s advisable to speak with a qualified Texas family attorney. Contact Carrington Smyth PLLC today for additional information or to schedule time to discuss your situation.