At Frank, Frank, Goldstein & Nager, we focus exclusively on the collection of bad debt. Due to non-payment, many of our clients will obtain money judgments or file mechanic’s liens against real property to secure payment.
Dorian Lam, CEO of Cornerstone Land Abstract was kind enough to sit with us and answer some frequently asked questions regarding how judgments and mechanics’ liens affect the transfer of title. Dorian provided insight into how the conveyance of liened property can trigger payment.
About Cornerstone Land Abstract
Jocelyn: Dorian, thank you for joining me today. Can you tell us a little about you and your company?
Dorian: I’m the CEO of Cornerstone Land Abstract, a title insurance company. The simplest way to describe what we do is that we help people close their real estate deals.
We act as a central hub during the closing process and issue title insurance policies. Title insurance ensures that the property being purchased is transferred free and clear of liens, encumbrances, and ownership defects that could affect the buyer’s rights.
For example, when someone buys a property, they want to be certain they are purchasing it from the true legal owner. The last thing any buyer wants is someone appearing after closing claiming ownership. Our role is to prevent that from happening.
How Mechanic’s Liens and Judgments Affect Title
Jocelyn: Many of our clients file mechanic’s liens and/or obtain money judgments that become liens against real estate. How is title affected?
Dorian: Mechanic’s liens and judgments are two of the biggest red flags in a title search. They can take priority over other interests in the title chain.
Before a property can transfer with “clean title,” those liens must typically be cured. Otherwise, the new owner risks assuming those defects.
What Does It Mean to “Clear” a Lien?
Jocelyn: What does it mean when you say a lien must be cleared?
Dorian: It means the lien must be formally resolved in the public record.
- For a money judgment, a Satisfaction of Judgment must be filed.
- For a mechanic’s lien, a discharge or release must be recorded.
An email saying the issue has been resolved is not sufficient. The satisfaction or discharge must be properly filed with the appropriate recording office so it is reflected in the official title record.
Until that happens, the lien remains a cloud on title.
Can a Buyer Take Title Subject to a Judgment or Lien?
Jocelyn: If a property has an unsatisfied lien, can a buyer simply take title subject to the judgment or lien?
Dorian: Technically, a lien can be “excepted” from a title insurance policy. That means the policy will not provide coverage for that specific lien.
If the lienholder later attempts to foreclose, the title insurance company would not defend or indemnify the owner. The buyer would assume the full risk.
From a practical standpoint:
- Most real estate attorneys strongly advise against it.
- Lenders will not issue a purchase mortgage unless liens are satisfied.
In almost all financed transactions, liens must be cleared before closing.
Do Liens Follow the Property After Sale?
Jocelyn: If the property transfers ownership, does the lien disappear?.
Dorian: No. If a lien is recorded against the property itself—identified in New York by block and lot—it runs with the property. A transfer of ownership does not eliminate it.
This is why judgment creditors are often paid at closing: because their liens attach to the property and must be resolved before clean title can issue.
Can Sellers Post a Bond or Use Escrow Instead?
Jocelyn: Instead of paying the lien at closing, can a seller post a bond or escrow funds?
Dorian: In some situations, yes.
- A mechanic’s lien may be bonded, allowing the closing to proceed while the dispute continues separately.
- Funds may be placed in escrow to ensure payment after closing.
These are curative tools designed to facilitate transactions. However, lenders generally require full satisfaction before funding.
What If the Lien Is “Expired”?
Jocelyn: What happens if a mechanic’s lien or judgment is technically expired but still appears on the title report?
Dorian: Mechanics liens may expire if not foreclosed within statutory timeframes. Judgments act as liens on real property for a set number of years unless extended.
However, if a lien or judgment still appears in the public record, it will appear on the title report.
Title underwriters take a conservative approach. Even if a lien is technically expired, it may still need to be formally cleared to eliminate risk. The general rule is simple:
If it appears in the record, it should be resolved before transfer.
What if judgment was entered against only one spouse?
Jocelyn: If only a judgment was entered against one spouse, not both, how does the judgment affect jointly owned property?
Dorian: If a judgment is attached to the property and both spouses remain on the deed, it must be satisfied before transfer—even if the parties later divorce.
Ownership of record controls. If both parties are still owners, the lien must be addressed before clean title can be issued.
Practical Advice for Buyers and Creditors
Jocelyn: Do you have any final advice for buyers or creditors?
Dorian: My strongest recommendation is to run title early—before signing a contract.
Many buyers fall in love with a property, invest time and money, and only later discover litigation, judgments, or significant liens. Some title issues can take years to resolve.
Running a title report early can prevent costly surprises.
Why This Matters to Judgment Creditors and Lienors
For creditors who have properly recorded judgments and/or mechanic’s liens:
- Your lien may prevent a closing until resolved.
- You may be paid at closing because clean title cannot issue without satisfaction.
- Proper recording is critical to protecting your position.
Thank you for your time, Dorian. We certainly appreciate you being with us and answering these questions.
Please note that it is not always necessary to proceed to judgment and/or file a mechanic’s lien to be paid. Each claim is different but you should be an advocate for yourself and exercise all options to get paid.
If you have questions about getting paid by demand, mediation , arbitration, litigation , proceeding to or enforcing a judgment or lien, contact Frank, Frank, Goldstein & Nager .We Have The Experience That Pays…
