What is the nature of a judgment lien?

The nature of a judgment lien is defined by its origin, which stems from legal actions taken as a result of a court judgment. When a creditor wins a lawsuit against a debtor, the court's ruling may allow the creditor to place a lien on the debtor's property to secure payment for the owed amount. This lien does not result from unpaid taxes, mortgages, or utility bills, but specifically from the outcome of litigation, making it a powerful tool for creditors.

This understanding is pivotal in real estate and title insurance practices, as judgment liens can significantly affect the transfer of property and the marketability of a title. Properties encumbered by a judgment lien may be subject to sale to satisfy the debt, and potential buyers need to be aware of such legal claims during the title search process.