Judgment liens on real property: recent decision causes uncertainty for title companies, bankers, and lawyers.

• Author: Hillard, Benjamin
• Position: Florida

What did the legislature intend by prescribing a 10-year period with an option to renew concerning judgment liens on real property? A recent decision gives wider latitude to creditors and puts bankers, title companies, and real estate lawyers in a quandary.

Statute of limitations sub-periods for judgment liens on real property were first prescribed by the Florida Legislature in 1987. The italicized language below was added to F.S. [section] 55.10 as follows:

(1) A judgment ... becomes a lien on real estate ... when a certified copy of it is recorded in the official records ... of the county ... [in which the property is located].... And it shall be a lien for a period of 7 years from the date of the recording.

(2) The lien ... in subsection (1) may be extended for an additional period of 7 years by re-recording a certified copy of the judgment ... within the 90-day period preceding the expiration of the lien provided for in subsection (1).

(3) In the event the lien is extended under subsection (2), the lien of the judgment ... may be further extended by re-recording a certified copy of it within the 90-day period preceding the expiration of the lien provided for in subsection (2).

(4) In no event shall the lien upon real property created by subsections (1), (2), and (3) be extended beyond the period provided for in s. 55.081 [20 years]. (1)

The current statute retains the seven-year period for judgments recorded between July 1, 1987 and June 30, 1994, (2) but for judgments recorded after June 30, 1994, the initial period shall be 10 years. (3) A lien may be extended for an additional 10 years by rerecording a certified copy of the judgment, prior to the expiration of the lien. (4)

Until recently, this statute provided clear guidance for Florida lenders and title companies. However, a recent Fourth District Court of Appeal decision, if adopted by the other district courts, has the capability to turn the lending industry in Florida upside down. Historically, title companies and lenders ignored judgment liens that were greater than 10 years old as beyond the sub-statute of limitations and their underwriting guidelines instructed underwriters that any judgment lien not renewed prior to expiration could no longer be a lien on real property. Today, hundreds of millions of dollars of Florida title policies are now suspect; now revitalized, once expired liens may prevent homeowners from being able to refinance or sell their homes.

In Franklin...