The Collection Process, Part 1: Protecting Your Judgment Through Property Registration

Sometimes, getting judgment against the opposing party is the easy part. 

When you are successful at trial, the most common award is one of damages:  financial compensation for the loss you have suffered.  This is true whether the matter is a breach of contract, a personal injury, trespass, or most other claims. 

In some instances, collection is straightforward.  If the defendant (known after judgment as a “judgment debtor”) has insurance, or has provided security (essentially, collateral) then damages are paid out promptly.

Increasingly, however, cases involve parties who are uninsured and who are either unwilling or unable to pay immediately.  In these cases, the successful party (called a “judgment creditor”) has to take steps to compel the judgment debtor to pay the judgment. 

This is the first in a series of blog posts focused on collection methods available after receiving a judgment. 

Today, we will talk about the registration of judgments on property. 

Registering a judgment against property is one of the most common methods of enforcing a judgment.  Put simply, if a judgment debtor owns a property, you can register your judgment against that property similar to a lien or a mortgage.  When a judgment is registered against a property it prevents the sale of that property until the judgment is satisfied and registration is removed (or a court orders the sale).  This works to “protect” what is often the judgment debtor’s most valuable asset. 

In addition to preventing the sale of the property without the judgment creditor’s consent, registering a judgment on title also allows the judgment creditor to force the sale of the property to satisfy the debt.  This can be an effective negotiating tool (e.g., the judgment debtor will pay the judgment to avoid the sale of their family home) and an effective collection tool (e.g., real property is often a person’s main asset). 

There are some downsides with this collection method. 

The first and most obvious is that it is only available if the judgment debtor owns property.  If the judgment debtor is a renter, or the property they live in is in their parents’, spouses’, or children’s name, then registration cannot take place. 

The second downside is that judgments rank behind mortgages in priority.  This means if a property has a mortgage (or mortgages) on it, and the property is sold, the mortgage must be paid out in full before the judgment creditor receives any payment.  If the property has a large mortgage, or the mortgage is in default, there may be very little – or no – funds leftover after paying the mortgage.  This is particularly true when the market is slow, and houses are selling for less than they were at the time of purchase. 

The third downside is that judgments must be paid out rateably with other judgments and charges after mortgages.  This means, for example, if a judgment debtor has multiple judgment creditors, or unpaid property taxes, then the equity in the property is split proportionally between those debts.  This can limit the amount you can collect.

The fourth downside is that judgments can only be registered against the judgment debtor’s interest in the property, and not the whole property.  What this means is that if the judgment debtor owns a property jointly with their spouse, children, business partners, or other person, you can only register the judgment against the judgment debtor’s “share” of the property.  This can make both sale of the property, and collection, difficult. 

Registration of a judgment is a highly effective method of collection.  When it is not available, there are other methods. 

In the next post in this series, we will talk about garnishment. 

Disclaimer: This content is provided solely for informational purposes and is not intended for use in any legal proceeding. You should consult a qualified lawyer for advice tailored to your specific circumstances.