How A Florida Judgment Lien Affects Your Real Estate Closing

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Can a Florida Judgment Lien on Homestead Property Affect Your Closing?

There are scenarios where a recorded Florida Judgment Lien could affect your ability to sell a home or land. For example some homeowners caught in the 2008 financial crisis or other financial difficulties may have had the misfortune of having to file bankruptcy in order to discharge their debts. In cases where part of the discharged debt burden included judgment liens filed against the debtor, there can be implications for future real estate sales transactions.

How Does a Florida Judgment Lien Work?

As part of a typical civil court judgment, the court may order the payment of money from one party to the other. If the party owing the money (the debtor) does not pay, the party awarded the money (the creditor) may file a Florida Judgment Lien Certificate with the Department of State. The debtor then becomes subject to an officially recorded lien.

A judgment lien on real property entitles the judgment creditor to have the sheriff’s department levy and sell the judgment debtor’s property in order to pay the creditor the awarded judgment. Florida law allows the sheriff to seize:

  • Personal property owned by the debtor. This generally includes movable things such as art, antiques, cars, boats, furniture, horses, jewelry and other valuables.
  • Real property owned by the debtor such as houses, condos, buildings, land, or similar holdings.

Property that is exempt from seizure includes one motor vehicle worth $1,000 or less, one additional personal property item worth $1,000 or less, and an individual’s primary home or homestead. This latter is called the homestead exemption. Florida defines its homestead exemption as the debtor’s property interest in his or her primary residence, subject to any lien that attached before the property acquired homestead status. (Fla. Const. art. X, §4.)

To qualify for the Florida Constitution’s homestead exemption and gain protection from a Florida Judgment Lien on homestead property, the debtor must be a Florida permanent resident and the subject property must be the debtor’s primary place of residence. The Florida Constitution grants unlimited homestead protection against judgment creditors to any Florida resident regardless of length of residency.

When bankruptcy is involved, the homestead exemption protects a primary residence of unlimited value from creditors as long as the property is not larger than half an acre in a municipality or 160 acres elsewhere and the debtor has lived in Florida and maintained the primary residence for the preceding 40 months or more. In cases where the 40-month residency requirement has not been met, homestead protection is capped at $160,375. Liens may be attached to any owner’s equity in excess of this amount.

Judgment Liens and Real Estate Sales Transactions

Any judgment liens that are part of the public record can affect a Florida homestead property owner’s ability to provide clear title in a sale. Even though a bankruptcy proceeding may clear all debt obligations, any judgment that remains in the official public records of the county where the subject property is located will appear on a title commitment. Similar to a mortgage, any judgment listed on the commitment must be satisfied or released before clear title can be provided to the buyer.

Steps should be taken well in advance of the intended sale date to establish protected homestead status and clear any recorded liens on your property. Depending on the amount of the judgments, a title insurance underwriter might accept a simple owner’s affidavit that declares the property to be your constitutional homestead and thus protected from judgment lien creditors. However, if the value of recorded judgment liens is high, an underwriter will be unlikely to accept an owner’s affidavit.

Avoiding a Judgment Lien on Real Property

If a simple owner’s affidavit will not suffice, and aside from paying judgments at closing, there are two strategies for arranging the problem-free sale of your homestead property in the presence of judicial liens. The first strategy for preventing a judgment lien from impairing the sale of your homestead property is available through the Florida Statutes.

Florida Homestead Protection

Article X, Section 4, Constitution of the State of Florida (1968) exempts a homestead from forced sale and provides that no judgment or execution shall be a lien thereon. As will be seen, this strategy would need to be implemented several months before any proposed sale closing event and ideally before any attempts to attach a judicial lien to the property.

Designation of homestead by owner before levy, § 222.01, Florida Statutes, stipulates that any natural person (not a corporation or partnership) residing in the state may avail of the provisions of the constitution and laws exempting property as a homestead from forced sale under any process of law. This is done by making, signing, and recording in the circuit court a written statement describing the real property and declaring that it is the homestead of the party in whose behalf such claim is being made.

Once a judgment on the matter is received and a certified copy of a judgment has been filed in the public records, a person who is entitled to the homestead exemption may file a notice of homestead in the public records of the county in which the homestead property is located. The notice informs filers of judgment liens that the property is an exempt homestead and will be conveyed or mortgaged. Lien holders have 45 days to respond, either to argue the homestead status of the property or foreclose a judgment lien on the property. If they fail to do so, any buyer or lender may take the property free and clear of any judgment lien.

Avoiding Judicial Liens During Bankruptcy

The second strategy involves removing or “avoiding” judicial liens during a bankruptcy procedure. When the subject property is a homestead residence, a Florida resident debtor is entitled to motion the Bankruptcy Court for an order removing a judicial lien from the property. Note that the lien must have already attached to the property in question.

If a bankruptcy proceeding has been completed sometime in the past, it is not wise to assume that the bankruptcy attorney has automatically taken steps to block liens in consideration of the possibility that you might want to sell the home someday. Bankruptcy attorneys often do what is necessary to have debts discharged without considering the future ramifications of any judgments already recorded. They do not take the additional steps necessary to avoid judgment liens.

Unfortunately, attempting to reopen a closed bankruptcy case in order to file a lien avoidance motion will probably involve additional court and attorney fees. Moreover, it may not be possible to reopen the case if doing so “prejudices” the creditor — for example, if a creditor has already incurred costs related to beginning a foreclosure on the home.

Dutiful bankruptcy attorneys will follow through and file the requisite motions and orders to have any judicial liens on exempt property avoided, so that their client can sell their homestead in the future without worrying about judgment liens. However, implementing the bankruptcy strategy as a method to deal with liens in the period immediately preceding a sale is problematic. Aside from the time required to complete bankruptcy proceedings and obtain the desired judgment, there is a mandatory waiting period before any liens are officially removed.

Be Proactive in Dealing with Judgment Liens

Sellers often do not address lien concerns prior to the sale of their property only to find out that the requirements for satisfying or releasing the judgment liens cannot be fulfilled before the proposed closing date. Therefore, it is imperative for homeowners who have judgment liens recorded against them to seek competent legal advice as soon as possible when considering the sale of their homestead property.

The homestead exemption discussed in this article does not protect homestead property from all creditors and all judicial liens. This is why it is important to have a knowledgeable real estate lawyer working for you. The team at Barry Miller Law is expert in all aspects of real estate title.

If you or someone you know has questions concerning Florida homestead protection, dealing with judicial liens on homestead property, or any other matter pertaining to real estate law, contact Barry Miller Law for assistance at 407-423-1700 or by email at for a consultation.