Money Judgments
A judgment is a final ruling by the court of jurisdiction determining the rights and obligations of the parties to an action. . A money judgment is the sum of money awarded by the court to the judgment creditor (plaintiff) that the judgment debtor (defendant) must pay.
In landlord tenant matters, a landlord may have a cause of action to file a lawsuit against a tenant for failure to pay rent or to remove a tenant from the rental unit due to a material breach of the lease. As legal remedies, a court may order a judgment of possession in favor of the landlord to return possession of the rental unit to the landlord and/or award a money judgment to the landlord to collect money owed by the tenant for unpaid rents, physical damage to the rental property, and costs of eviction.
In awarding the money judgment, the landlord (plaintiff) becomes the judgment creditor and the former tenant (defendant) becomes the judgment debtor.
A judgment creditor has the right to legally demand and take certain steps to recover his money from the judgment debtor and to require debtor performance of any legal obligations. The landlord can collect the amount awarded in the money judgment plus any interest that accrues from the entry date of the judgment until the tenant debtor satisfies the judgment. Certain expenses incurred in collection efforts can also be collected from the debtor.
However, the fact that a money judgment has been awarded does not ensure payment of the judgment. While the money judgment gives the landlord the legal right to collect his money, the responsibility for collection is on the landlord to do so. The landlord will need to determine his collection strategies and take appropriate action to enforce the judgment.
Many states allow the debtor a 30 day right of appeal from the date the judgment was entered. During this time, the debtor could voluntarily pay the judgment, file an appeal of the judgment or ask the court to establish an installment payment schedule. If an appeal hearing is held, the judgment can be enforced after the appeal decision is returned, usually within 10 days. The appeal period must have expired before collection efforts by the landlord can begin. In the case of a default judgment being awarded, a landlord could begin execution of the judgment immediately after the judgment was entered.
Some debtors will pay once the judgment has been entered into the court records. However, many debtors do not pay without some type of encouragement from the judgment creditor. Accordingly, as a first step in the collection process, a landlord should make a written request to the debtor asking for full payment of the judgment. The request can include the reminder to the debtor that an unpaid judgment will appear on the debtor’s credit record.
A landlord should keep in mind that not all judgments can be collected immediately and that not all judgments are ever collectible. While a landlord has the legal right to collect the full judgment, the landlord also has the right to propose a settlement for a lesser amount. This could be beneficial if the debtor is unemployed or has few assets with no real expectations to acquire assets in the near future.
There are some debtors who do not have enough reachable assets to satisfy a judgment. There are some debtors who will likely never have enough reachable assets to satisfy a judgment, even a relatively small judgment. These debtors are said to be “judgment proof.” A judgment awarded against a judgment proof debtor could be difficult to collect. For this reason, some landlords hesitate to file a lawsuit against a tenant considered to be judgment proof. Landlords should keep in mind that in most states judgments are typically good for 5 to 10 years and can be renewed for additional periods. In most states, a renewal of judgment extends the period for collection to the same period of time as the original judgment. Accordingly, a landlord could have 10 years or more in which to collect the judgment. A judgment proof debtor’s circumstances could change for the better in some way during this period that would result in eventual payment of the money judgment including interest and collection expenses.
A landlord must collect his money judgment before the judgment expires under the statute of limitations for the state that recorded the judgment. If the judgment is paid in installments, the statute of limitations is tolled, or stopped, during that time.
There can be ways in which the statute of limitations can be waived, extended, or revived. This is usually as a result of an explicit prior arrangement between creditor and debtor or an implied prior arrangement. A waiver could extend the statute of limitations as a result of a mutual agreement. The parties could agree to a formal extension of the time to pay or a revival could occur because of new promises, oral or written, made by the debtor. In some states, a partial payment would extend the statute of limitations and in others, a partial payment revives the limitations.
When a judgment is renewed, the accrued interest will be added to the principal amount owing. From then on the creditor is entitled to interest on the accrued interest. Any liens placed on the debtor’s real property must also be renewed at the time the judgment is renewed. Without renewal of the judgment, the liens would not be enforceable since the judgment upon which the liens were based was not enforceable.
A basic collection process is to locate the debtor; locate the debtor’s assets; lien those assets; and/or seize those assets. Collection strategies will depend upon a number of factors such as: the amount of judgment, the debtor’s assets and income, the cost of collection, the amount of time and energy a creditor is willing to commit to the task, and extenuating factors such as the debtor filing bankruptcy.
A landlord as judgment creditor cannot and should not harass, humiliate, or intimidate the judgment debtor. However, a landlord can and should remain in contact with the debtor during the period of time that the judgment remains unpaid. A brief call or letter can remind the debtor of his obligation to satisfy the judgment. As applicable and in compliance with statutory requirements, a landlord can monitor relevant sources periodically to determine the debtor’s financial condition, physical address, and employment status to evaluate the debtor’s current ability to satisfy the judgment. New information regarding the debtor’s status can be incorporated into future collection strategies in efforts to collect the judgment.
The fact that the debtor relocates to another state does not usually prevent collection of the judgment. If the landlord as judgment creditor determines the debtor’s assets are located in a state other than the original judgment issue state, the landlord will need to transfer the judgment to the debtor’s new state in order to enforce the judgment there. The process to register the judgment in another state as a foreign sister-state judgment is known as domesticating the judgment. Once the foreign judgment has been domesticated in the sister-state, the judgment has the same effect as any other judgment in that jurisdiction.
The landlord has the obligation, after the debtor has satisfied the judgment, to file a document of satisfaction of judgment with the court of jurisdiction and to release all liens and garnishments or property belonging to the debtor in accordance with the satisfaction of judgment.