New York Real Estate Salesperson ExaminationProperty OwnershipMedium
A buyer is interested in purchasing a property but discovers there is an existing judgment lien against the current owner. The buyer wants to ensure clear title. What is the most common and effective way to remove this encumbrance before or at the time of closing?
- AThe buyer can purchase title insurance, which will cover the lien automatically.
- BThe seller must pay off the judgment, and the lienholder must issue a satisfaction of judgment.
- CThe buyer can wait for the lien to expire, as judgment liens typically have a short lifespan.
- DThe buyer can simply state in the purchase agreement that they do not accept the lien.
Show answer & explanationAnswer & explanation
Correct answer: B. The seller must pay off the judgment, and the lienholder must issue a satisfaction of judgment.
To clear a judgment lien, the underlying debt must be satisfied. Once paid, the lienholder files a satisfaction of judgment, which officially removes the encumbrance from the property's title.
Why the other options are wrong
- A. While title insurance protects the buyer, it doesn't remove the lien; it compensates for losses if the lien is enforced. The goal is to clear the title, not just insure against it.
- C. Judgment liens in New York can last for 10 years and be renewed, making waiting impractical and risky.
- D. A buyer's statement in a purchase agreement cannot unilaterally remove a legally recorded lien.
Satisfaction of Judgment
A legal document filed by a creditor acknowledging that a judgment debt has been fully paid, thereby releasing any associated liens.
- Required to clear a judgment lien from a property's title.
- Must be filed by the lienholder (creditor) with the court.
- Ensures clear title for subsequent transactions.
Memory trick: Pay the debt, prove it's done, then the lien is gone.