Creditors recently received another tool to enforce payment of civil judgments:  a new statute (MCL 600.2801 et seq.), effective September 1, 2004, authorizes the creation, recordation and priority of a lien on a judgment debtor’s interest in Michigan real property.

This new judgment lien, (A) upon recordation of a certified notice of judgment lien with the register of deeds, immediately attaches to the debtor’s then-existing and/or after-acquired interests in land in that county (although it does not attach to property held as tenants by the entirety, unless the underlying judgment is against both husband and wife), (B) avoids the requirement that creditors first (unsuccessfully) execute on the debtor’s personal property before executing against real property (MCL 600.6004), (C) avoids fees assessable by the sheriff on a writ of execution, and (D) is good for five years following recordation (which may be extended one time upon timely re-recordation).

A judgment creditor seeking to exercise this new, non-consensual lien is required to (A) complete and file a notice of judgment lien (SCAO form MC 94) (civil division will charge a $10 certification fee plus, if required, a $1/page copy fee), (B) record the certified copy of the notice with the register of deeds for the county where the land to be affected is located (and pay statutory recording fees), and (C) serve a copy of the notice on the debtor by certified mail (personal service is required if the judgment lien is for $25,000 or more), and file proof of service with the court. 

Once recorded, the judgment lien enjoys priority over subsequently recorded liens; subject, however, to enumerated exceptions, including purchase money mortgages, future advance mortgages, construction liens, and tax liens.

Interestingly, notwithstanding generally applicable recording requirements, a notice of judgment lien does not require a legal description.  Presumably, rather than searching the tract index, a potential purchaser/mortgagee will discover a recorded judgment lien by searching the debtor’s name under the grantor/grantee index.

In this regard, the statute requires a judgment creditor pay actual damages and costs (presumed to be at least $300) sustained by a person with the same or similar name as a judgment debtor unless, within 14 days of receipt of written demand (accompanied by reasonable proof distinguishing identity), the judgment creditor discharges the judgment lien as to property owned by the aggrieved person.

Otherwise, the judgment lien remains in effect until the earlier of (1) expiration of the underlying judgment, (2) expiration of 5 years after the notice of judgment lien is recorded (unless re-recorded), or (3) recordation with the register of deeds where the property is located of (a) a discharge signed by the creditor/attorney (which is required within 28 days after payment in full), (b) a certified copy of a satisfaction of judgment, (c) a certified copy of a court order discharging the lien, or (d) a copy of the debtor’s bankruptcy discharge (with an attached copy of the bankruptcy schedule listing the judgment debt).

In any event, the statute expressly negates any right to foreclose a judgment lien.  Rather, its benefit is realized only upon the debtor’s sale or refinancing of real property subject to the judgment lien; and, then, is limited to the debtor’s net equity in the affected property (after satisfaction of senior liens, taxes, and closing costs). 

So, although significantly short of guarantying payment of a judgment debt, Michigan law now improves a creditor’s chance of collection by affording a quick and inexpensive way to attach a judgment debtor’s interests in real property. 

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