CAN YOU RUN AWAY FROM A MONEY JUDGMENT?

By
Real Estate Attorney with THE ZARETSKY LAW GROUP - Board Certified Real Estate Atty and AUTOMATED LAND TITLE COMPANY
http://activerain.com/droplet/45KS

This week I received no less than 4 inquiries from out of state owners of Florida real estate.  Each one of them was under the impression that by moving away from Florida they also "moved away" from the ability of the bank to pursue them for any deficiency or other Florida incurred debt.  Each one of them is completely wrong.

Recognition of Judgment

Generally, the "recognition" of a foreign judgment occurs when the court of one country or state accepts a judicial decision made by the courts of another "foreign" country or state, and issues a judgment in substantially identical terms without rehearing the substance of the original lawsuit.

Enforcement of Judgment

Once a foreign judgment is recognized, the party who was successful in the original case can then seek its "enforcement" in the recognizing state or country. If the foreign judgment is a money judgment and the debtor has assets in the recognizing jurisdiction, the judgment creditor has access to all the enforcement remedies as if the case had originated in the recognizing jurisdiction, e.g. garnishment, judicial sale, etc. If some other form of judgment was obtained, e.g. affecting status, granting injunctive relief, etc., the recognizing court will make whatever orders are appropriate to make the original judgment effective.

Essentially, if a Florida court enters a deficiency money judgment for $50,000 and the debtor lives in Kentucky, that judgment can be enforced in Kentucky as if the judgment was obtained in a Kentucky court.  In other words, you can't "run away" from the judgment.

Full Faith and Credit -  United States Constitution

Almost every state has adopted the Uniform Enforcement of Foreign Judgments Act (see sections 55.501 to 55.509 for the Florida version, which mirrors most all the others).  In reality, the Act is not necessary for enforcement of judgments between states - although it does give the mechanical method of doing so.  The basic premise for enforcing judgments across state lines is under the "full faith and credit clause" of the United States Constitution (see Article IV, Section 1), which requires each state to consider judgments of another state to be "local". [Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State. And the Congress may by general Laws prescribe the Manner in which such Acts, Records and Proceedings shall be proved, and the Effect thereof.]

Outside the USA

Foreign country judgments are handled pretty much the same way, with one important proviso - the judgment has to have been rendered with at least some of the basic prerequisites of due process and proof that we have in the United States.  The concept is called "comity".  The term refers to the idea that courts should not act in a way that prejudices the laws or judicial decisions of another jurisdiction. Part of the presumption of comity is that other jurisdictions will reciprocate the courtesy shown to them.  For example, such reciprocity would mean that the judgments of a particular jurisdiction will be recognized and enforced by a forum only to the extent that the other jurisdiction would recognize and enforce the judgments rendered by that forum.  End effect is, between the common theory of comity and the many foreign country treaties, you should presume that a judgment can follow you about anywhere in the world.

As stated above, most non-treaty countries (that is, a treaty with the USA) use the basic sense that the judgment must have been obtained using due process (there must have been jurisdiction of the foreign court to enter the judgment) and that the judgment was not obtained through fraud. The non-US court will not (usually) look into the facts behind the judgment, such as retrying the case in chief.

A good summary of enforcement procedures for the British Commonwealth was prepared by Steve Loble at http://www.loble.co.uk/enforcement_of_foreign_judgments.htm

In essence, the enforcement procedure is first one of "registration" of the foreign (or other state) judgment and then the actual enforcement.  So first you register the judgment so it gets recognition, and then you enforce the registered judgment.

For How Long is the Judgment Enforceable?

Another question is how long a judgment is good for if sought to be enforced in another state. Generally the law requires full faith and credit.  So a Florida judgment good for 20 years in Florida would be good for 20 years in Kentucky, even if Kentucky has only a 10 year judgment duration statute.  See a good article on this subject in the Florida Bar Journal.

You Can't Run Away

It is an "urban legend" that if you go from a "deficiency state" to a "non-deficiency state" that you are then protected from the judgment. If there is a judgment that can be pursued in the state where the obligation was created, then it can be enforced where a similar obligation may not be enforceable.  Essentially, you cannot "run away" from a judgment or debt in one state by moving to another state - neither before nor after the judgment is rendered.

Copyright 2011 Richard P. Zaretsky, Esq.

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Be sure to contact your own attorney for your state laws, and always consult your own attorney on any legal decision you need to make. This article is for information purposes and is not specific advice to any one reader.

Richard Zaretsky, Esq., RICHARD P. ZARETSKY P.A. ATTORNEYS AT LAW, 1655 PALM BEACH LAKES BLVD, SUITE 900, WEST PALM BEACH, FLORIDA 33401, PHONE 561 689 6660 email: RPZ99@Florida-Counsel.com - FLORIDA BAR BOARD CERTIFIED IN REAL ESTATE LAW - We assist Brokers and Sellers with Short Sales and Modifications and Consult with Brokers and Sellers Nationwide! Shortsales@Florida-Counsel.com Website www.Florida-Counsel.com  .

See our easy to understand articles at:

TABLE OF CONTENTS - SHORT SALE AND LOAN MODIFICATION ARTICLES

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  1. Kelly Willey 06/13/2011 05:19 AM
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Rainer
85,848
Debbie Atwood
Century 21 Real Estate Center Everett, WA - Everett, WA
Real Estate Broker

Never would I have thought that you could just "run away" from your debt but there is some really good information here.  I'm going to bookmark this.  Thanks for sharing this.

Jun 03, 2011 03:37 PM #1
Ambassador
1,686,674
Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

Richard,

thanks. I am getting tired of al those guys who know how to avoid it. I am tired of people telling me that there is a law, just adopted, that relieves them of any [possible liability and are suprised that we never heard about it

Jun 03, 2011 04:31 PM #2
Anonymous
Kevin

Richard,  How would/could it be determined if the John Doe who the Judgment is entered against is in fact the John Doe who the enforcement would/could be made against?

 

Jun 03, 2011 05:43 PM #3
Ambassador
2,020,637
Fred Griffin
Fred Griffin Real Estate - Tallahassee, FL
Licensed Florida Real Estate Broker

Good advice, Richard.

If you intend to default on a Financial Obligation, or "dodge" a Judgment or Court Order, seek Legal Counsel.

Nice Blog!

Jun 03, 2011 05:58 PM #4
Rainmaker
596,862
Jim Hale
ACTIONAGENTS.NET - Eugene, OR
Eugene Oregon's Best Home Search Website

Running away is surely the sign of a person with (a) bad judgment.

Jun 03, 2011 06:22 PM #5
Rainmaker
1,139,152
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

Good stuff Richard. I too hear folks state that since they don't live in Florida the lender can't come after them.

Here's a question for you. Does this also apply to a foreign invetsor? Specifically one who is British and lives full time in the UK who does a short sale in Florida? Can a US lender, if they receive a judgment, garnish wages and assets in the UK?

Jun 04, 2011 12:15 AM #6
Ambassador
1,858,107
Fernando Herboso - Broker for Maxus Realty Group
Maxus Realty Group - Broker 301-246-0001 - Gaithersburg, MD
301-246-0001 Serving Maryland, DC and Northern VA

I was just wondering the same as Bryant. . I have a client that lives now  in Peru. .

Jun 04, 2011 12:28 AM #7
Rainmaker
1,450,175
Gary L. Waters, Broker Owner, Waters Realty of Brevard, LLC
Waters Realty of Brevard, LLC - Rockledge, FL
... a small office, delivering big service!

I guess the only approach is handle it now as running will only prolong the issue. Good stuff, as usual, thanks!

Jun 04, 2011 12:56 AM #8
Rainmaker
258,279
Richard Zaretsky
THE ZARETSKY LAW GROUP - Board Certified Real Estate Atty and AUTOMATED LAND TITLE COMPANY - West Palm Beach, FL
Florida Real Estate Attorney

Bryant and Fernando (#6 and 7) -

As stated above, most non-treaty countries (that is, a treaty with the USA) use the basic sense that the judgment must have been obtained using due process (there must have been jurisdiction of the foreign court to enter the judgment) and that the judgment was not obtained through fraud. The British or Peruvian court will not (usually) look into the facts behind the judgment, such as retrying the case in chief.

A good summary of enforcement procedures for the British Commonwealth was prepared by Steve Loble at http://www.loble.co.uk/enforcement_of_foreign_judgments.htm

In essence, the enforcement procedure is first one of "registration" of the foreign (or other state) judgment and then the actual enforcement.  So first you register the judgment so it gets recognition, and then you enforce the registered judgment.

This was an excellent question and I will edit my article to include this more detailed information.

Jun 04, 2011 01:43 AM #9
Rainmaker
258,279
Richard Zaretsky
THE ZARETSKY LAW GROUP - Board Certified Real Estate Atty and AUTOMATED LAND TITLE COMPANY - West Palm Beach, FL
Florida Real Estate Attorney

Kevin #3

you can determine if you have the right person just like you would if it is in the same state - some identification proofs.  Anyone that gets into a transaction with anyone else should confirm whom they are dealing with with some identification proof -

Jun 04, 2011 01:55 AM #10
Rainmaker
496,970
Wendy Rulnick
Rulnick Realty, Inc. - Destin, FL
"It's Wendy... It's Sold!"
Richard - How common is it for judgments to be "sent" to the other states and also to foreign countries? There must be an expense involved to the creditors to pursue someone all over the U.S. and around the world. First, finding out where someone lives, filing legal paperwork, etc. I am guessing this would be done only if the amount of the judgment was substantial?
Jun 04, 2011 03:44 AM #11
Rainmaker
258,279
Richard Zaretsky
THE ZARETSKY LAW GROUP - Board Certified Real Estate Atty and AUTOMATED LAND TITLE COMPANY - West Palm Beach, FL
Florida Real Estate Attorney

Wendy - "substantial" is in the eyes of the beholder.

Once a judgment is entered, all the costs of enforcing it are chargeable to the debtor - added on to the judgment.  There are collection attorneys and agencies all over the world that work on this exclusively. I was asked to testify as an expert in a British court by a company in England that has as its only business the finding of American judgments by British residents and then enforcing them in England. This is not uncommon at all.

Taken one step further, a judgment for $25,000 purchased at a discount for $5,000 has a very large payoff if the person is tracked down and pays even one half of the judgment amount.  Plus if there is capability, the entire amount plus the costs of finding the debtor and going to court are also added to the judgment and could be collected!

Lastly, if a person is "hiding" and cannot be found, there is an argument that the statute of limitations gets "abated" during that time - so the 20 years could go on much longer!

Jun 04, 2011 04:33 AM #12
Rainer
53,932
Richard Riley
RE/MAX Properties SW - Orlando, FL
CDPE, I.R.E.S.

another god post with a clear explanation of the topic.  Thank you Richard.

Jun 04, 2011 02:07 PM #13
Rainmaker
966,857
Rob Arnold
Sand Dollar Realty Group, Inc. - Altamonte Springs, FL
Metro Orlando Full Service - Investor Friendly & F

Your article just re-emphasizes to me the importance of asset protection strategies in order to protect from these judgments.  Seems like there is a ton of potential liability out there from all the short sales and foreclosures that have occurred in recent years.

Jun 05, 2011 02:16 AM #14
Rainmaker
388,363
John Walters
Frank Rubi Real Estate - Slidell, LA
Licensed in Louisiana

Richard would filling bankruptcy give the debtor relief status still in these cases?

Jul 04, 2011 08:20 PM #15
Rainmaker
258,279
Richard Zaretsky
THE ZARETSKY LAW GROUP - Board Certified Real Estate Atty and AUTOMATED LAND TITLE COMPANY - West Palm Beach, FL
Florida Real Estate Attorney

John (#15) - Generally the answer is yes, a Chapter 7 bankruptcy would relieve the debtor of the ability of the lender (or other past creditors) to collect funds from the debtor.  If the debtor must file a Chapter 13 bankruptcy, then a plan to pay the unsecured creditors from the debtor's "excess funds" would be the way to "reduce" the total outstanding debt.

Jul 05, 2011 03:45 AM #16
Rainmaker
122,601
Cristina Salcedo
REMAX Champions - Riverside, CA
Corona, Riverside Realtor

Great That was my question... filling bankruptcy is the only way out!  Thank you

Jul 09, 2011 10:22 PM #17
Anonymous
James

I'm on disability, I have 54,000 in judgements from 6 years ago and another 75,00 in credit card debt that I was never sued for. The statue of limitations in Florida to sue is 4 years. So if I was in Florida They could nt sue me anymore, correct? Also I see they can't sell a home to satisfy a judgement, is that any value of a home?

Sep 25, 2015 07:22 AM #18
Rainmaker
258,279
Richard Zaretsky
THE ZARETSKY LAW GROUP - Board Certified Real Estate Atty and AUTOMATED LAND TITLE COMPANY - West Palm Beach, FL
Florida Real Estate Attorney

Actually on a debt the obligation is enforceable for 5 years from when it came due (the maturity date).

As to the home, if your home is your homestead in Florida, then it cannot be force sold by a regular creditor to enforce a money judgment.  Value is irrelevant.

Sep 25, 2015 07:25 AM #19
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Richard Zaretsky

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