Federal vs. State Jurisdiction

Question: When my case was removed into Federal Court and under Federal jurisdiction, a state court continued on without jurisdiction and with fraudulent deed and void judgment auctioned off my condo. How do I vacate a void judgment and correct my title to the property?

Answer: From your question I must assume that you were litigating an issue in state court concerning your condo, and the case was subsequently removed from state to federal court. I mention this to preclude the possibility that the federal court to which you refer was a bankruptcy court, in which instance a totally different set of rules apply.

It appears that after removal, your adverse party obtained an order from the state court and foreclosed on your property. If at that point the state court was without jurisdiction to issue such an order the sale would be void and subject to being set aside by the court with actual jurisdiction. Obviously this matter must be referred to your attorney for whatever action might be appropriate.

Title Premiums on New Construction

Question: We are refinancing a construction loan. We first bought the lot in 9/05, then got a construction loan in 10/07, now we are getting a mortgage loan. We have been charged title insurance each time. Is this fair?

Answer: In reviewing the closings for your home, four separate title policies were issued in the first two and one policy in the last. Each policy represented an increased amount insured in both the owner's and mortgagee's policy. When the company incurs more risk with each policy it charges a new premium, but at a discounted rate due to closely occurring closings. Your lenders required a new mortgagee's policy in each closing, which increased the costs. I have not attempted to recalculate these premiums, since your question is one of fairness.

Your question is understandable considering that these recurring costs seem to be for the same service, but in actuality they are not. The title company has no alternative but to follow the lender's instructions and requirements, and charge premiums at the uniform rates promulgated by the State Board of Insurance. It is at that level that the issue of fairness should be addressed, and I would invite you to refer this issue to the board for its consideration. Premiums and procedures are reviewed periodically, and are subject to public hearings on the very concerns you raise.

Judgment and Lien(s)

Question: I won my case in a small claim court (Travis county, Austin Texas). However, the defendant refuses to pay the judgment. I am trying to place a lien(s) on his property and/or vehicles and/or personal belongings. However, I found out that the defendant has already removed his name from his house and his two vehicles. They are under his wife’s name now. At this point, I’d like to know if I can still place a lien(s)?

Answer: A court judgment for monetary damages by itself does not create or impose a lien. A judgment lien is created when a prevailing plaintiff obtains an abstract of judgment from the clerk of the court and records it in each county in which the defendant owns non-homestead real property. Upon recording, the abstract establishes a lien on all the defendant's non-homestead real property in that particular county. An abstract of judgment is valid for a period of 10 years with exceptions for certain government entities which extend them to 20 years. At that point the plaintiff is also known as the "judgment creditor" and the defendant the "judgment debtor." The statutory provision for judgment liens is Section 52.001 et seq of the Texas Property Code. Due to the nature of this blog, answers are confined to the aspect of liens on real property.

An abstract of judgment does not create a lien against specific property of the debtor, but a general lien against any property the debtor might own which can be executed upon and sold by legal process in satisfaction of the judgment. The judgment lien is subject to certain defenses, the most common being homestead, to which a judgment lien will not attach. See Section 41.001 et seq of the Property Code. The homestead owner alleges this defense when seeking a release of the judgment from the creditor under Section 52.0012 of the Code. When the judgment creditor records an abstract of judgment, identifies the defendant's property and obtains a writ of execution to have the property sold in satisfaction of the judgment, the debtor can raise the homestead issue in defense of that action. Executions on judgments are addressed in Sections 34.001 et seq of the Texas Civil Practices and Remedies Code.

In most cases the creditor records an abstract of judgment in hopes that a title company will discover the lien on a judgment debtor seller's property and require the seller to obtain a release from the creditor. The seller may then be forced to pay off the judgment to get a release,. Many transactions fail because of a judgment against the seller's property that cannot be settled or released, and in those transactions the creditor usually remains unpaid.

What about those situations where the property is in the name of the other spouse - does the judgment lien attach? That answer depends upon the ownership status between the spouses, whether the property is separate or community or a gift from one spouse to the other, or whether it is, or was ever non-homestead property when the abstract was recorded, and other factual circumstances. Spousal ownership subject to creditor's claims and liens is set out in Section 3.202 of the Texas Family Code, Rules of Marital Property Liability. Spousal defenses are made whenever the creditor moves to execute on its judgment lien. The issue becomes clear only when the property is in the name of the spouse against whom the judgment was taken at the time the abstract is recorded. Again, homestead is the usual defense. The complexity of this issue defies simple or definite answers. In practical terms, the amount of the judgment that stands to be collected rarely justifies the expense of litigating the issue in the event of complications.

From these comments, you will note that the subject of judgment liens and their enforcement is too extensive to adequately explore in a blog. Those needing assistance with specific problems in this area should consult a knowledgeable real estate attorney who is familiar with these laws and remedies.