Judgment Lien Principles Courtesy Of The Indiana Supreme Court
August 05, 2016
This week’s post should be read along with last week’s post: Indiana Supreme Court Tackles Lis Pendens Law. The topic of discussion is JPMorgan Chase v. Claybridge, 39 N.E.3d 666 (Ind. 2015). Today’s question surrounds whether a judgment, which was not properly docketed/indexed, was nonetheless a valid and enforceable lien.
A key fact in Claybridge was that a homeowner’s association had obtained a personal judgment against a property owner. However, the county clerk, in an oversight, “mistakenly failed to enter the [judgment] on the Judgment Docket.”
In addressing Indiana judgment lien law, the Court noted the following:
- A “lien” is a claim “on another’s property” to secure a debt. And, an action to enforce a lien is in rem (as to property), not in personam (as to individual).
- By statute, a personal judgment does not become a judgment lien on real estate until “the judgment is recorded in the docket in the county where the realty held by the debtor is located.” Indiana’s judgment lien statute at Ind. Code 34-55-9-2 makes judgments a lien “after the judgment is entered and indexed.”
- Despite the judgment lien statute requiring the judgment to be properly indexed, Indiana common law provides that a judgment always constitutes a lien between the parties to the judgment and between the parties who have actual notice of the judgment. Moreover, a judgment constitutes an in rem real estate interest.
The Court in Claybridge concluded that, although the HOA’s judgment was unrecorded, the HOA held an enforceable judgment lien as between it and the defendant/owner. In other words, the failure to index the judgment did not wholly destroy its effect as a lien. On the other hand, the lien was not enforceable as to third parties unless they had actual notice of the lien.
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