Judgment Liens and a Stuck Escrow: Would You Strip to Close a Sale?


Judgment Liens delaying your closing? Did you ever hear of “lien stripping?”

Real estate closings often get hung up when old judgment liens are discovered. Lawyers call the process of removing such liens, “lien stripping.”

Many sellers have filed personal bankruptcy. People filing bankrupty often have judgment liens. Judgment liens are not automatically removed in bankruptcy.  Reopening old bankruptcy cases to strip a lien is often possible. Sometimes the liens got overlooked by inexperienced lawyers or by individuals who have filed without representation. They might not even have known about the lien. But you discover it for them when you are about to close.

“Surprise liens” can kill a sale or refi. Going back into the old bankruptcy court case may be an option to “strip the lien.”

Surprise Judgment Liens? Reopening Old Bankruptcy Cases.

Los Angeles Bankruptcy CourtI’ve seen situations where creditors filed liens on property after bankruptcy. I’ve also seen cases where a lien was recorded before the bankruptcy but the client didn’t acquire the property until after the bankruptcy. It is not always necessary to re-open a closed case. An experienced bankruptcy lawyer could make a speedy difference. Knowing how to talk to the title company, a lawyer can often solve some lien problems in a just a few hours.

There is ano obvious advantage to all parties if a transaction can be saved without going back to court for legal action. When legal action is necessary, it will usually take around 60 days. Typical attorney fees for that work will range from arount $1500 to $3000.

The requirements for lien stripping in a bankruptcy case are derived from the actual bankruptcy statutes. Basically, the owner must be able to prove that the market value of the property on the date of the original bankruptcy filing was less than what was owed on mortgage balances plus homestead exemption. Courts will often require an appraisal report as evidence of value.

What a Bankruptcy Lawyer Needs To Evaluate the Case.

Here’s what a bankruptcy lawyer wants to see. The lawyer will need a title report, and copys of recorded  lien notices.  Also, your client’s old  Bankruptcy Court papers.

Real estate problems and bankruptcy cases often overlap.



What are you waiting for? If you have a bankruptcy-real estate question, call me. I look forward to speaking with you any time you need help to figure one of these things out.


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You’re sure to like “ASK LEON” . A question and answer column. L.A. Bankruptcy AttorneyLeon Bayer answers real questions from readers. You will find it on the Nolo Publications bankruptcy blog web site. We are also found on Google+.  This blog is a publication of  Bayer, Wishman & Leotta. You might also like our  Human Guide to Bankruptcy. Bayer Wishman & Leotta handles emergency Los Angeles bankruptcy cases. We are “The home of the free bankruptcy consultation”. You can learn more about us at http://en.wikipedia.org/wiki/Leon_D._Bayer

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Leon Bayer and Jeffrey Wishman are Los Angeles Bankruptcy attorneys. They have been practicing bankruptcy lawyers in Los Angeles for 37 years and are Certified Bankruptcy Specialists by the State Bar of California. These are lawyers who bring experience, skill and creativity to the highly complex area of bankruptcy law. At this Los Angeles law firm, the your initial consultation with an expert is free. Mr. Bayer is a coauthor of Nolo's The New Bankruptcy: Will It Work for You?, authors the “Ask Leon” series on Nolo’s Bankruptcy, Debt & Foreclosure blog, and writes on bankruptcy topics for Nolo’s website. In addition, Mr. Bayer devotes a significant number of hours to volunteer legal services. The State Bar of California has commended Mr. Bayer for this work every year since 2004.