(30) Specifically, the eventual inclusion of Creditor-Mirroring Rights and Powers in the Bankruptcy Act, when read plainly, expanded the estate representative's reach to the same remedies that by then were generally available to Judgment Lien
Significantly, a junior judgment lien
forecloses senior judgment liens--not what one usually expects when it comes to liens.
This was true regardless whether the creditor wished to enforce the judgment against all debtors, or whether a given debtor held an interest in property against which a judgment lien
had previously been recorded.
Chase claimed all of the $300,000 surplus money, since its initial $100,000 mortgage was placed on the property before Selma Kent docketed her $408,000 judgment and in addition, the remaining mortgages of Chase were superior to the claim of Selma Kent because of her subordination agreement, under which her judgment lien
became secondary to the new Chase mortgage.
(18) The court concluded that this situation could be remedied in two ways: 1) by a declaration that the recorded judgment did not otherwise constitute a lien on the property; or 2) by bringing some other equitable action that would "remove any appearances that a judgment lien
is valid and/or effectual." (19) Although this case is instructive on the proper remedy to utilize, the court used the word "valid" instead of "enforceable." Hence, the implication is that a judgment lien
imposed on homestead property is invalid.
(22.) Of course, if we assume there is a mortgage lien that was previously junior to a judgment lien
and that the mortgage lien survives the foreclosure, and that the junior judgment lien
is destroyed but immediately reattaches, then logic suggests that the previously senior judgment lien
could lose priority to the previously junior mortgage lien.
This will include the owner, the mortgage company, and any other lien claimants, whether by way of mechanics' lien or judgment lien
. Only by including all parties with an interest in the property can you achieve a foreclosure of the property ensuring that any recovery is not subject to later attack for failure to determine a parties interest in the property.
Pursuant to Section 55.201-209, Florida Statutes, from and after October 1,2003, any holder of a judgment wishing to obtain a judicial lien on the personal property of Judgment debtor that is subject to execution must file a Judgment Lien
Certificate with the Florida Department of State, in accordance with the provisions of that law.
That would require both owners to approve a sale of the property, would provide either owner the right to force a sale of the property and (most worrisome of all) would subject the property to a judgment lien
if one of them were to declare bankruptcy or be assessed a large judgment in court."
The core of the argument is that a judgment lien
could never attach to the homestead by operation of Florida constitutional law.
This means that upon the bankruptcy filing, a debtor, or a creditors' committee (in Chapter 11), may act as a hypothetical judgment lien
creditor with the ability to unseat prior, unperfected liens.
Historically, title companies and lenders ignored judgment liens
that were greater than 10 years old as beyond the sub-statute of limitations and their underwriting guidelines instructed underwriters that any judgment lien
not renewed prior to expiration could no longer be a lien on real property.