A classic refrain among lawyers and non-lawyers alike is that a judgment is “just a piece of paper.” That’s only true if you are unfamiliar with the rights afforded judgment creditors and the proper methods for perfecting those rights. This article serves as a primer on standard judgment due diligence.
The entry of the Judgment affords the judgment creditor certain rights of enforcement against the Judgment debtor including the right to garnish any of the debtor’s bank accounts or sources of income as well as the right to seize certain property of the debtor. However, there are some important things that a judgment creditor must do in order to perfect its rights under the judgment.
First and foremost, the entry of a Judgment gives a creditor the right to place a Judgment Lien on all of the debtor’s personal and real property located within Florida. Such liens, however, are not automatically created with the entry of the Judgment; there are certain steps that must be taken, including the filing of a Judgment Lien Certificate with the Secretary of State and the recordation of certified copies of the Judgment in any Florida county where the debtor owns real property. Without taking these critical steps, the judgment really is “just a piece of paper.”
Once a certified copy of a judgment is recorded in the public records to create a judgment lien on real property, that lien lasts for 10 years. A judgment can be re-recorded later for another 10 years or the balance of the remaining 20 years of the judgment’s lifespan, whichever is less.
It is critical to remember that a judgment must be re-recorded prior to the expiration of the initial 10-year term to avoid lapsing. If the judgment lien lapses, you will lose your relative priority as it relates to other liens on any property owned by the debtor in the county where the judgment was originally recorded.
Filing a Judgment Lien Certificate with the State of Florida should be part of standard judgment due diligence. A judgment creditor should also run a background report on the debtor in an effort to determine whether the debtor owns any real property in Florida. .
Beyond the basic due diligence, there are other steps that can be taken by a judgment creditor to enforce its judgment, including discovery in aid of execution and supplementary proceedings. Discovery in aid of execution is designed both to uncover the nature of any assets owed by the debtor as well as to apply pressure to the debtor to satisfy the judgment (no one likes his or her deposition to be taken, especially when the questions will focus on his or her financial situation).
If the debtor is evasive or seeks to conceal assets, proceedings supplementary can be brought to require the debtor to appear before the judge to answer questions about his or her financials. Ultimately, proceedings supplementary can be used to add additional parties to the action for liability under the judgment should the debtor make fraudulent transfers in an effort to avoid enforcement of the judgment.
Finally, as part of the Judgment, the debtor is required to supply certain financial information to the Judgment creditor through a Fact Information Sheet within 45-days of the entry of the Judgment which is designed to help the creditor locate assets. This informational disclosure is a critical aspect of enforcing monetary judgments, and many lawyers unfamiliar with judgment enforcement fail to utilize it effectively. If the debtor fails to provide the required information, the debtor can be held in contempt of court and can even be placed in jail.
One final note that is important to any primer on judgment enforcement is that most of the attorney’s fees expended in enforcing the judgment are recoverable against the judgment debtor. Usually the court will enter a separate final order awarding said fees after a motion and hearing brought by the judgment creditor.
Litigation is hugely expensive and inefficient, and obtaining a monetary judgment only results from the expenditure of significant resources. It is, therefore, critically important for the judgment creditor to use the rights afforded by the judgment as effectively as possible.
Sometimes, due to the economic situation of a debtor, a judgment may not have a significant amount of value. However, if enforcement appropriately and efficiently, judgments are very powerful instruments which can be substantially recovered upon. The only way to ensure a judgment is not “just a piece of paper” is to under proper judgment due diligence, perfect the judgment liens, and then properly assess the fiscal wherewithal of the debtor.
If you need assistance with judgment enforcement, whether you are on the creditor’s side of the judgment or the debtor’s, please contact our offices and set an initial consultation.
 You may also “domesticate” this judgment to other states for enforcement under the Full Faith and Credit Clause of the United States Constitution. This requires certain procedures to be followed depending on the state where the judgment is to be domesticated, but the process is not normally too arduous or expensive.
 The reporting services we use are a good resource but are not perfect. The only way to truly know what real property may be owned by the debtor would be to perform a county-by-county search of each county’s real property records which is certainly do-able by the Firm but which is relatively expensive and beyond the scope of our standard judgment due diligence.