I Have a Judgment, Now What? Priority of Judgments
February 2, 2017
Publications
Litigation can often be long and tiresome. Unfortunately, a successful verdict does not always lead to the desired outcome – the defendant paying up. Previous parts of this series addressed other aspects of collecting and enforcing judgments. Part I of this series discussed collecting a money judgment through the garnishment process. Part II explained a second option, conducting a sheriff’s sale of the defendant’s real or personal property. In the second part of this series, the article assumed that no liens existed against the defendant’s property.
For the third installment in the series, however, we will look at the effect that previous liens against the defendant have on one’s ability to collect on a judgment.
The entry of a judgment by a court acts as a lien on all real property in that county. The judgment essentially acts as an underlying security for the debt owed by the defendant. When a defendant sells his or her real property, the defendant is obligated to first satisfy any liens on the real property, or the new owner cannot take a clean title.
So, how does a judgment creditor know where they stand in relation to other judgments and liens?
State statute dictates the priority in which liens must be paid, and defendants pay liens with the highest priority first. Filed state tax liens have priority over all other liens. Mortgage liens have second priority, and include, but are not limited to, standard mortgages, open-end mortgages, and defeasible deeds in the nature of mortgages. Next in line are verdicts for a specific sum of money. Other adverse judgments from a court have fourth lien priority, followed by amicable judgments, and then writs issued by the court of common pleas. Last are other instruments that, when filed and indexed with the prothonotary of the court of common pleas, create liens against real property.
Lien priority does not last forever, and in many instances priority will be lost if a plaintiff does not take the necessary steps to revive the judgment lien within five years after its entry. Note, tax liens and mortgage liens are distinct from judgment liens because they are not the result of a court judgment. Therefore, plaintiffs do not need to revive tax liens and mortgage liens in order to maintain priority.
Judgment revival occurs in two ways. The first way is through an agreement to revive, which requires the defendant’s signature. If the defendant refuses to sign the agreement to revive or cannot be found, then the plaintiff must pursue the second option and file a praecipe for writ of revival. Defendants have a limited number of defenses against the writ of revival and therefore courts are likely to issue the revival writ upon the filing of the praecipe.
Understanding lien priority is important to ensuring that you are in the best position to receive your long over-due payment. The litigation group at McNees Wallace & Nurick can aid clients in understanding lien priority and avoiding any associated pitfalls.
The author extends special thanks to Erica Koser for her assistance with this article.
