Ask the TITLEMAN™ - Bankruptcy/Judgment; Easement;
by John T. Lotardo aka TITLEMAN™-Sr VP/General Counsel, Stewart Title & Trust of Phoenix
Q. I am pleased to have found your column and have enjoyed reading it. I work in the title clearance field and have done so for about 4 years. My company issues title commitments. My question is about bankruptcies. Specifically, if a money judgment filed by a creditor is among the creditors listed in the bankruptcy and is not paid through the bankruptcy, does it still have to be paid or does the creditor just go away? When a search is done and this judgment is found, can we remove it from title even though, according to the creditor, it is not paid?
A. You bring up a good point that is not an easy answer. You must determine whether or not the judgment of the creditor has been recorded and if it has been “wiped off” your property. In your case, it sounds like the creditor has recorded in the correct County records since you have found it in your search. As you know, the purpose of filing for bankruptcy is that the debtor is unable to pay his or her debts. But that does not mean all debts are forgiven. In fact, the Bankruptcy Code has been amended to counter what has been considered excessive use of the system to wipe out debt when the debtor should or has the ability to pay it. But back to the issue. In this case you have in Arizona, once a judgment is recorded in the County where the property is located, it becomes a judgment lien. A judgment lien attaches to the real property of the debtor and the lien must be dealt with whether through the Bankruptcy or not. This is generally true except for instances wherein the property is protected by the applicable homestead exemption law. I have seen debtors motion the Bankruptcy Court to wipe out or “avoid” a particular lien when the debtor has no equity in the property or that the property is protected by the homestead exemption. A review of the bankruptcy papers may help clear up what or how this lien should be handled.
FREE 3-in-1 Credit Report + FICO Scores with trial! Click here!
Q. It was suggested that I ask you about an easement. If I wanted to give someone access to the property behind me how big does this easement have to be so that they have ingress and egress?
A. You bring up a good question with no exact answer. In the old days, county roadways used 33 feet as a starting point however you are merely creating a private easement for vehicular and pedestrian ingress and egress. Many I have seen have been 20 feet wide. May I suggest you check for any minimum requirements from a zoning perspective. Also, is an easement for public utilities also needed? This is something the parties may not have even discussed but could be discussed now rather than at a later date. Also, who is responsible for maintenance of the easement once created? These are just a few things to consider now while everyone is working together.
The information supplied is of a general nature and should not be relied upon as comprehensive legal advice. Please consult with your own local legal counsel. To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.
Copyright John T. Lotardo. All rights reserved. John Lotardo (aka the TITLEMAN™) is Senior Vice-President and General Counsel for Stewart Title & Trust of Phoenix, Inc., and State Underwriting Counsel for Stewart Title Guaranty Company. He is a member of the National Advisory Councils for GoGetEscrow.com, GoGetLoan.com, GoGetNotary.com and GoGetRealEstate.com. The information supplied is of a general nature and should not be relied upon as comprehensive legal advice. Please consult with your own local legal counsel. For more about John, visit: www.GoGetEscrow.com/Get/Titleman or www.AskTheTitleman.com.