Our lien against transferred vs. foreclosed property.

[michellesmith]

What is the name of your state (only U.S. law)? Texas

We have a judgment lien filed against a person/property in Texas. We received a call from a title attorney with the following story: Our debtor transferred his property a few months ago to a person he owed money to in order to settle a debt. Evidently that person didn't need to do a title search -not sure how they didn't know about the lien. Anway, now new property owner sees that I have a lien on it (maybe they are now trying to sell it?) and want me to release it. This attorney told me that our lien is not valid because it was a transfer of property to pay a debt and would I sign a release. I asked more questions. He said that I can sign it or he can go through the foreclosure process (costing his client money) on the previous owner/our debtor, thus making our lien invalid anyway. Is there some circumstance that would make this true? We have called our attorney who is out of town for a week. Thanks in advance for the help.

[Stevef]

Originally Posted by michellesmith

What is the name of your state (only U.S. law)? Texas

We have a judgment lien filed against a person/property in Texas. We received a call from a title attorney with the following story: Our debtor transferred his property a few months ago to a person he owed money to in order to settle a debt. Evidently that person didn't need to do a title search -not sure how they didn't know about the lien. Anway, now new property owner sees that I have a lien on it (maybe they are now trying to sell it?) and want me to release it. This attorney told me that our lien is not valid because it was a transfer of property to pay a debt and would I sign a release. I asked more questions. He said that I can sign it or he can go through the foreclosure process (costing his client money) on the previous owner/our debtor, thus making our lien invalid anyway. Is there some circumstance that would make this true? We have called our attorney who is out of town for a week. Thanks in advance for the help.

Don't sign anything until your lawyer advises you to sign. This story sounds fishy.

[tranquility]

You have a secured debt. Unless the transfer for debt was the result of a prioritized security (like, the mortgage), there is no reason for you to give it up.

[FlyingRon]

Sounds fishy indeed. Foreclosure (if at all possible) wouldn't help him unless his lien was senior to begin with.

Don't know how much your judgment is for, but I'd suggest if foreclosure was going to cost the client money, they ought to offer that money to you to release your lien.

[michellesmith]

Thank you so much for your replies. It does sound fishy! Here is a leter we received from the property owner's attorney, with identifying info changed (Mr. Doe being our debtor and the Jones being the new property owners). Of note, our judgment was filed before their property transfer was filed. Thoughts? And, thank you, we will not sign anything w/o talking to our real estate attorney.
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I represent the Jones. They loaned money to Mr. Doe, who subsequently defaulted on the payments. The Jones retained a first lien Deed of Trust in certain land to secure the debt owed by Mr. Doe. and timely recorded its lien in the deed records (copies attached). To prevent foreclosure, Mr. Doe executed a Warranty Deed in Lieu of Foreclosure (copies attached) conveying this land back to the Jones. At or about the same time, and unknown to the Jones, Mr. and Mrs. White (me) obtained and abstracted a judgment against Mr. Doe (copies attached). In conducting a recent title search, we discovered that the White’s Abstract of Judgment against Mr. Doe has clouded the title to this property which is now owned by the Jones. Property Code, the original Deeds of Trust, and the terms of the Deed in Lieu of Foreclosure allow the Jones to foreclose thereby eliminating the cloud on the title to the property in question that exists as the result of the recording of your Abstract of Judgment. But, to do so will require additional time and expense for the Jones, who like you, have suffered substantial loss as a result of default by Mr. Doe.

I am requesting that the Whites voluntarily execute a partial release of their judgment lien only to the extent of the property to which the Jones have superior right and title by virtue of their prior and first Deed of Trust liens. Although your attorney can advise you, in my opinion this will not affect the validity of your judgment against Mr. Doe or any lien this may create on other property that either may own in Rockwall or Hunt Counties. In my opinion, this will provide the same result concerning the properties owned by the Jones as if they went through with a foreclosure but will do so without causing the Jones to suffer additional expense and loss.

[FlyingRon]

Tell them to pound sand. Perhaps you will get nothing, but who knows what the foreclosure sale will bring.

Again, the can ameliorate their losses by paying off your lien.

[michellesmith]

Originally Posted by FlyingRon

Tell them to pound sand. Perhaps you will get nothing, but who knows what the foreclosure sale will bring.

Again, the can ameliorate their losses by paying off your lien.

You took the words right out of my husband's mouth.

Thanks again for the advice.

[Sgt. Pepper]

If the Jones' deed of trust is indeed superior, and the property is worth less than the debt owed to the Jones', then there's no reason not to release your lien.

Ask your attorney to find out those details.

[tranquility]

That is different from your first post. I believe they may be able to eliminate your lien through foreclosure (if the claims are true and superior to yours). But, as the others have said, since your signing will save the other party time and expense, I'd negotiate (through your attorney) a settlement for your signature to release the lien.

I'm not even sure the money you get for the release would count agianst your judgment.

[michellesmith]

Originally Posted by Sgt. Pepper

If the Jones' deed of trust is indeed superior, and the property is worth less than the debt owed to the Jones', then there's no reason not to release your lien.

Ask your attorney to find out those details.

Yes, this is our fear, now that I see all the documents. Thanks again.

[michellesmith]

Originally Posted by tranquility

That is different from your first post. I believe they may be able to eliminate your lien through foreclosure (if the claims are true and superior to yours). But, as the others have said, since your signing will save the other party time and expense, I'd negotiate (through your attorney) a settlement for your signature to release the lien.

I'm not even sure the money you get for the release would count agianst your judgment.

You're right. I didn't understand all the details. We will await our attorney's advice.

Good point on negotiating a settlement...

Thanks again.