Posted by Paul Jazwierski on May 06, 2005 at 15:03:02:
Refinance money is considered purchase money in Colorado as long as it is in first position. I was in an identical situation, spent $5000 on lawyers and $3000 on the judgment. I lost.
Mistakenly Satisfied Judgment lien - Posted by JD
Posted by JD on April 26, 2005 at 21:05:11:
I will make this ‘generalized’, but use fictious information to make it clear.
First off let me say that you can disregard any homestead or bankruptcy issues in this hypothetical situation.
Judgment creditor obtains a judgment against Bob Robertson and John Johnston (JJ). Judgment creditor (XYZ Collections) records said judgment in a County where Bob Robertson owns property, and hence the judgment becomes a lien against Bob Robertson’s property. A few months later XYZ enters into an agreement with JJ to discharge JJ from the judgment obligation. XYZ submits an order discharging JJ from the judgment to the Court (the order clearly discharges only JJ). The Judge signs the order. (Here is where the problem begins) Somehow the partial discharge is improperly entered into the Court’s computer (by court staff) as a full Satisfaction. Someone obtains a copy of the Full Satisfaction from the Court and records it. Bob Robertson then refinances his property without paying off the judgment.
Obviously it would not be difficult to obtain an order re-instating the judgment against Bob Robertson. My question is; Would the priority of the Judgment date back to the original recording date of the judgment, or only to the recording date of the reinstated judgment?
The property is in Colorado. I want to purchase the judgment.
Re: Mistakenly Satisfied Judgment lien - Posted by JohnBoy
Posted by JohnBoy on April 28, 2005 at 22:21:24:
Just curious, but why did the creditor have to submit an order of discharge to the court and have a judge order the discharge?
My understanding is that the creditor only needs to provide a document stating satisfaction of judgement and the debtor can record it. No need to go through the court to do this. So why would the court be involved?
The creditor just needs to provide JJ with a satisfaction of judgement that JJ could record show only JJ is released. To release BR the creditor would need to provide a separate satisfaction of judgement stating BR is released. So why did the court need to be involved in the middle of this by having to have a judge sign an order to release it?
The only way I know that you would need a judge to sign anything is if the debtor had to go to court to get released because the creditor refused to release them. If the creditor agrees to release the debtor then there is no need to have the court or a judge involved with releasing anything.
What am I missing?
Re: Mistakenly Satisfied Judgment lien - Posted by JD
Posted by JD on April 28, 2005 at 23:00:14:
I agree with the premise of you question. Generally a creditor does not need the Court’s approval to release or satisfy a judgment (at least where I live). I don’t know why the Plaintiff’s attorney did it this way. maybe there are exceptions I do not know about. Perhaps it was a condition demanded by the dischagred Debtor as a part of the stiulated settlement. Perhaps the creditor was concerned that releasing one of the parties would be viewed by the Court to be taking unfair advantage of the remaining party, and hence wanted to get a Judge’s permission.
Re: Mistakenly Satisfied Judgment lien - Posted by JohnBoy
Posted by JohnBoy on April 28, 2005 at 23:33:05:
Who knows. But as far as wanting to buy the judgement, doesn’t the creditor first need to get that reinstated before you buy it? As it stands now, the judgement was satisfied, although mistakenly by the court’s error. Would you as a buyer of this be able to get that reinstated? I would think at this point only the debt remains owing. As far as what happens after it’s reinstated, I can’t imagine the lender losing their position as a result of the court’s error. The records showed the judgement was satisfied. Had it not been, the lender would not have made the loan. So I would “think” the lender’s position would remain in place and any reinstated judgement would be second to the new lenders lien.
My question would be, can the court be held liable for making this error since it resulted in the creditor losing their position or if the new lender was to lose their position because of this? Or is the court exempt from being held liable for any errors they may make?
It’s a good question and one I would like to know the answer to as well. But I would be afraid to buy the judgement at this point. At least not until the creditor gets it reinstated first. Then only if I was willing to be second to the new lien if that were the case.
Are you sure the court errored on this? Could it be the judge said both parties would have to be released since they were both named on the judgement and the creditor would have to obtain a new judgement against the one party? Maybe there is more to this than what it appears. But if the court did error then the court should be held accountable for it, whether that’s possible or not.
Have you asked any attorneys about this yet?
Re: Mistakenly Satisfied Judgment lien - Posted by JD
Posted by JD on April 29, 2005 at 09:53:54:
I am sure the Court was in error and is insulated from such claims. Especially since I believe that it is a reversable error. Getting ‘this’ Judgment reinstated will be a slamduck, I am not concerned about that.
The way I view it, when Bob Robertson refinanced his home he should have reasonably known that he had a lien obligation to XYZ Collections. And hence when he signed his affidavits at the Title company for the refinance, he was committing fraud. The lender is lending subject to that fraud (a reason for Title Insurance).
When dealing with esoteric lien issues like this I have yet to find an attorney that can speak authoritatively regarding ‘the law’. Many know the Statutes, but the Statutes and case law, are pretty slim when it comes to lien law. Attorneys invariably give you the conservative CYA answer when they don’t know.
Re: Mistakenly Satisfied Judgment lien - Posted by JohnBoy
Posted by JohnBoy on April 29, 2005 at 22:38:08:
I can’t see where title insurance would be obligated to pay for this. There was a satisfaction of judgement recorded. It was issued by the court. I wouldn’t think the title insurer would be obligated to pay for the court’s error. I can’t see where the lender would have to lose their position because of the court’s error.
Whether BR comitted fraud here is questionable. I’m not sure if that would be fraud in this case. But even if it was fraud on his part, what does that have to do with the insurance or the lender? Title was clear according to the records. It was the court that errored. Why would the title insurer and the lender have to be held liable for an error made by the court? It’s OK for the court to be insulated from their error while the title insurer and/or the lender be held accountable and lose out because of it?
It’s OK for the court to make a mistake. It’s OK for BR to not say anything. It’s OK for the title insurer or the lender to be the one to eat the loss because of the court’s mistake and for BR not saying anything? What’s wrong with this picture?
It will be interesting to know how this turns out in the end. But it wouldn’t be right that the lender or title insurer has to get stuck for this. It’s not like they missed the judgement recorded against BR. The judgement was satisfied according to the records.
Is BR obligated to inform anyone he has a judgement against him? Even if it was satisfied according to the court? I know if I had a judgement against me and then it showed up satisfied, I sure as heck am not going to question it as to why or how it was satisfied! Which brings up another question. How did BR know the court issued a satisfaction of judgement? Did the court send him a copy of that as well? Who recorded it? BR? The other guy? The court? The creditor? Who told BR about it that it his judgement was satisfied?
It would seem to me that if the court errored and the court is insulated from being held liable for this, then it is only fair that the title insurer and lender are insulated from this as well. The record showed the judgement was satisfied. They did nothing wrong here. The court did! I understand the creditor may have done nothing wrong either, but does that void out the title insurers and lender’s position because of this?
It would seem to me that if the court is insulated from this, then the creditor is SOL. They have to get the lien reinstated and then their judgement becomes second to any current liens that exist now. But, who knows? It will be interesting to hear how this plays out.
Re: Mistakenly Satisfied Judgment lien - Posted by JD
Posted by JD on April 29, 2005 at 23:58:01:
BR and JJ are brothers. That should answer a few of your questions about who told who what and when.
I would argue that the Court record is a public record accesable to the Title Company. If the Title company had reviewed the Court file, they would have discovered the mistake. Would your opinion change if I had told you that the some mystery person had forged a Satisfaction of Judgment and recorded said forgery? If so, why? The two situations are exactly the same from an equitable standpoint.
Silent liens are risks that Title companies assume when they issue an extended Title policy (generally required when a lender is involved). The most common silent lien is that of a Mechanic’s lien. From an equitable point of view I think my judgment can be viewed just like a Mechanic’s lien. Mechanic’s liens may not be of record at the time of title search, but they can still become liens upon the property with a priority dating back to the date the work began. I don’t mean that the subject judgment is literally a Mechanic’s lien, I am just giving an example of a lien that does not have to be of record in order to be covered by title insurance. It isn’t fair that Title insurance companies are required to payoff such mechanic lien claimants? But it happens. So the fairness arguement is not neccessarily pertinent here IMHO.
Re: Mistakenly Satisfied Judgment lien - Posted by JohnBoy
Posted by JohnBoy on April 30, 2005 at 24:27:03:
Just curious. When the court issued a statisfaction of judgement, did they list two separate satifaction of judgements? One for each brother or did they list both brothers names on the one satisfaction of judgement?
Re: Mistakenly Satisfied Judgment lien - Posted by JohnBoy
Posted by JohnBoy on April 30, 2005 at 24:20:13:
Is the title company obligated to go back and read the court records pertaining the lawsuit that created the lien? Why? The court issued a satisfaction of judgement. Is the title company obligated to go back and read through all the closing documents from prior mortgages that had releases recorded?
I don’t see where a case involving fraud and forgery being the same as a court making an error. Not even from an equitable standpoint. Forgery is a crime. The court making a mistake is not a crime and the court is exempt from being held accountable. Hardly close to being the same thing. Equitable interest standpoint or not.
This apparently has nothing to do with a mechanics lien, so your argument about being a silent lien like a mechanics lien is not valid. Two complete separate issues here. But this is just my opinion.
Are you going to buy the judgement? Although, at this point, there is no judgement to buy. It’s been released. So I would think before you could buy this the creditor would need to first get it reinstated. I would think the only thing you have to buy at this point is the debt owed, where if you did that, you would have to go to court and obtain a new judgement. Then your new judgement would be behind everything currently recorded.
What are you going to do? Are you going to buy it? If this is just a matter of getting it reinstated where the judgement would keep it’s position it had before the new mortgage was recorded, then why doesn’t the creditor just do this? Why are they so willing to sell it now? And I assume they must be willing to sell it cheap or you wouldn’t be interested in this?
But if you are so set on this and feel you can pull this off, then buy it. Let us know how it turns out.
Re: Mistakenly Satisfied Judgment lien - Posted by JD
Posted by JD on April 30, 2005 at 11:50:55:
““Is the title company obligated to go back and read the court records pertaining the lawsuit that created the lien?””
I think that is what this situation may boil down to. The answer to your question if taken literally would of course be ‘no’, the title company/new lender is not ‘obligated’ to do much of anything.
But, what I think you are really asking is “is the Title Company/New lender bound by the documents in the underlying Court file”. My most acurate answer to that question is ‘I don’t know’. There is precedence for Title Companies looking at Court files to establish the veracity of liens. I have seen Title companies refuse to payoff judgments after establishing from the Court file that the named Debtor was not the same individual as the Buyer/Seller. I have seen Title companies refuse to payoff judgments after establishing from the Court file that process service was improper. Title companies routinely go beyond the public recording records to review lis pendens/divorce decrees/foreclosure actions, and to contact creditors in order to establish balances owed on judgments, and get releases for previously satisfied judgments.
I have decided to buy the judgment (barring any strong opinion to the contray before Monday). It has a $10,000 balance, I am paying $4,000. The judgment has already been reinstated, I didn’t want to confuse the thread by throwing that it. There are a few other angles that may get this judgment paid off, even if my priority angle does not pan out.
Re: Mistakenly Satisfied Judgment lien - Posted by Paul Jazwierski
Posted by Paul Jazwierski on May 06, 2005 at 12:37:19:
This whole conversation has no meaning at all if this is a Colorado judgment. In Colorado, the judgment will always be junior to purchase money mortgage. You will not be able to force your priority of the judgment, because the first mortgage on the property will always take a priority. If you don’t believe me, try fighting a title company on that. I did and I lost.
Re: Mistakenly Satisfied Judgment lien - Posted by Artton
Posted by Artton on May 06, 2005 at 14:36:27:
He/she was interested in the priority of the judgment relative to the ‘refinance’ Deed of Trust, not the purchase money Deed of Trust.