Despite the upswing in our economy over the past year, the number of collections lawsuits filed in Michigan has risen substantially. What is more, collecting on judgments is often a difficult and time-consuming effort for creditors, who are left to rely on remedies such as garnishments, levies and personal property seizures in the hope of being paid.
Beginning September 1, 2004, Michigan law provides for the establishment of “Judgment Liens.” Under the new statute, judgment creditors may record a notice of the judgment without providing a legal description. Once recorded with the register of deeds of each county in which the debtor owns real property, the judgment lien automatically attaches to all property owned by the debtor and also to any property the debtor later acquires. Upon the sale or refinancing of the property, the proceeds may be applied to satisfy the judgment after all senior liens, unpaid property taxes and closing costs are paid.
Under our prior system, a judgment creditor was required to execute against a debtor’s personal property before levying against the debtor’s real property. A judgment lien is a less-expensive collection tool that avoids the substantial costs and fees associated with execution sales and obtaining judicial levies against real property. In addition, judgment liens have priority over most liens and mortgages subsequently recorded against the property. With some exceptions, judgment liens remain in effect for five years and may be renewed.
For additional information regarding judgment liens and other debt collection issues, please feel free to contact a member of Berry Moorman’s Litigation Group.