Do I Have to Pay a Judgment Before Selling My Home?

The answer is probably ‘no’, but depends on certain facts.  It depends on the law of the state where the judgment debtor lives.  It also depends on the type of assets the judgment debtor has – exempt versus non-exempt.

I want to sell my home but the title company says I have to pay a judgment.

Assuming this is in Arizona then you are dealing with a title company that does not know how to read Arizona law.  See Arizona Revised Statutes 33-964:

A. Except as provided in sections 33-729 and 33-730, from and after the time of recording as provided in section 33-961, a judgment shall become a lien for a period of ten years from the date it is given, on all real property of the judgment debtor except real property exempt from execution, including homestead property, in the county in which the judgment is recorded, whether the property is then owned by the judgment debtor or is later acquired. A civil judgment lien obtained by this state and a judgment lien for support, as defined in section 25-500, remain in effect until satisfied or lifted.

B. Except as provided in section 33-1103, a recorded judgment shall not become a lien on any homestead property. Any person entitled to a homestead on real property as provided by law holds the homestead property free and clear of the judgment lien.

If this is your Arizona home (homestead) then do not let the title company bully you into paying the judgment.  Move to a different title company that knows how to read the law.

---

Pacific Western Bank and Castleton. Az Ct of Appeals, Div. 1, 12/2018) (collectively, “PWB”) appeal from the superior court’s entry of a preliminary injunction enjoining the sale of a home owned by the Castleton Revocable Trust (the “Castleton Trust”). Because a judgment creditor may not attach a judgment lien to homestead property, but instead may execute on its judgment only by way of a forced sale of the property under Arizona Revised Statutes (“A.R.S.”) § 33-1105, we affirm the superior court’s preliminary injunction.

---

I filed bankruptcy and want to sell my Arizona home, but the title company requires that I pay a judgment.

Again, the Arizona law applies even if you filed for bankruptcy.  It is important to list all debts, including judgments (remember you signed a sworn declaration that you listed 100% of all your debts).  Even if you forget to list this judgment it is still not a lien against your home (see the Arizona law above).

---

WHAT SHOULD I DO?

If a title company does not ignore judgment liens that show up on a title report on a seller’s homestead (even if no bankruptcy was filed), send a letter to the title company’s lawyer explaining the law and why this judgment lien does not attach to the homestead (include copies of the statutes: ARS 33-964.  Highlight the provisions dealing with homestead ‘exempt’ property.).  If the title company refuses to change their requirements then move the escrow to a title company that will (such as Pioneer Title – ask for Delbert Evens- or First American Title).

Note: if there is equity over the allowed $150,000 homestead then the judgment creditor must initiate a sheriff sale before the property is transferred.  If the creditor fails to go through the sheriff sale process before the property is transferred, the creditor has lost its remedy to get paid from the homestead property.

---

Note – selling your home while in bankruptcy will be a problem.  Most likely you will need to get permission from the court, or at least the trustee, to sell your home.  Talk to your bankruptcy attorney before deciding to sell your home.  If your bankruptcy attorney does not know the answer to your questions then hire another attorney.  This issue is a very basic one and every bankruptcy attorney should know the process.