Creating & Keeping a Texas Judgment Lien Alive

Introduction

Successfully collecting your Texas Judgment requires an aggressive use of post-judgment remedies. There are many collection remedies available to you as a judgment creditor. The focus of this article is the judgment lien.

Creating the Judgment Lien

A lien is a claim against a person’s property for payment of a debt. Your judgment is a court created debt in which another person, the judgment debtor, becomes obligated to pay you a certain sum of money. But, that court created debt does not automatically create a lien on the judgment debtor’s property. You must take affirmative action to fix a lien against your judgment debtor’s property with the debt your judgment creates. When you properly fix a judgment lien, it acts as a lien on all of your judgment debtor’s non-exempt real property in the county where you record it.

Attaching a lien to your judgment debtor’s property is as simple as recording an abstract of the judgment creating the debt. You just record an abstract of your judgment in each county where your judgment debtor owns real property to create a lien on the property. For example, suppose your judgment debtor owns property in Dallas County and Harris County. If you record an abstract of your judgment in Harris County but not in Dallas County, you attach a lien only on the property in Harris County. To affix your lien to the Dallas County property, you must record your lien in Dallas County.

Keeping the Judgment and Judgment Lien Alive

Once recorded, your judgment lien attaches to your judgment debtor’s non-exempt property for 10 years unless the judgment becomes dormant. If the judgment becomes dormant, the judgment lien ceases to exist.

Your judgment becomes dormant if you don’t issue a writ of execution within 10 years after the judgment was signed by the judge. If your judgment becomes dormant, it will lose its priority position in the abstract records. It is important, therefore, for you to keep your judgment lien alive. You can keep it alive by:

1. Recording a new abstract before the end of 10 years from the date of the last abstract; and

2. Executing on the judgment before it becomes dormant.

The Effect of a Judgment Lien

The potential impact of the Texas judgment lien was seen in the highly publicized case involving Pennzoil Company and Texaco in the mid-1980s. Texaco, Inc. v. Pennzoil Co., 626 F.Supp. 250 (S.D.N.Y. 1986), rev’d 107 S.Ct. 1519 (1987). As you may recall, Pennzoil won a very large judgment against Texaco. After the judge signed that judgment, Pennzoil was entitled to abstract it and record it in each county in the State of Texas. By doing so, Pennzoil was perfecting its judgment lien on all of Texaco’s real property in Texas.

Texaco, realizing the impact of the judgment lien, filed suit in the United States District Court for the Southern District of New York challenging the constitutionality of Texas judgment lien laws. Ultimately, the case was appealed to the United States Supreme Court. The Supreme Court ruled that the federal courts should not be interfering with the Texas judicial system. Texaco was forced to file bankruptcy to prevent Pennzoil from taking further action to perfect its judgment lien.

Practical Tips

Recording an abstract of your judgment is an inexpensive method to insure future collection. You should consider recording an abstract in:

1. The county where your judgment debtor lives.

2. The county where your judgment debtor works.

3. The county where your judgment debtor’s family lives (inheritance possibilities).

4. The county where your judgment debtor has previously owned property (he may try to invest again).

Keep a close eye on your time frames. You want to keep your judgment and judgment lien alive. You should begin the process of getting a writ of execution and a new abstract ready not later than 9 years after your initial judgment is signed. An early start will insure that all procedures are complete prior to the 10 year anniversary of the judgment and judgment lien.