Friday, August 10, 2007

Post-divorce, judgment enforcement & real estate closings...

A somewhat humerous but instructive experience we had this week involving all of the above. Fortunately it played out in the best way for my client but it should be instructive.

The background is that my client was held in contempt of court for failing to follow a court's order regarding some provisions of a divorce judgment...mediation/visitation refusals, ect. Plain and simple after a hearing she was proven wrong and in this instance the court then has the authority to require the violating party to pay the other parties attorneys fees. Court orders our client to reimburse the other party for a few thousand dollars in attorneys fees and a judgment is entered against our client. Here's where things get interesting and where the interaction with real estate comes into play.

Meanwhile my client (wife) is in the process of selling a home and leaving the Chicago area. And one of the easiest methods of judment enforcement is filing a lien against real estate (which the husband attempts to do here). But the husband doesn't know how to properly file a lien...he first files a bogus lien for more than the proper amount before the judgment was entered and then he attempts to correct it and again files an invalid lien. Well, the bogus lien comes up on a title company search and we rush into domestic relations court on an emergency motion to Release the Lien. The court ends up releasing both the bogus lien (which was not real and the amount was wrong) and the husband's second & faulty lien recording. Husband's lawyer then does file a proper lien against wife's property, fortunately he does this the day AFTER wife's real estate closing. Ah...poetic justice! Real estate closing happens and my client is gone.

Teaching points/questions:

--Personally I think as lawyer, if you're getting a judgment you should be locking up real estate with liens...not leaving it too clients; it's quick & simple if you know what you're doing.

--In Illinois, a judgment is converted into a lien on real estate by (1) recording a transcript, certified copy, or memorandum of judgment; or (2) recording a certificate of levy. 735 ILCS 5/12-101...just getting a judgment in court does NOT create the lien.

--My question, what would have transpired for my client, judgment holder and the buyer of the real estate IF judgment lien would have been perfected before the closing date but too late for the title company to see it? Post-closing a later date title search would be conducted and then it would be found but then what's the result? I honestly don't know...anyone??


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