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|Judgment Liens and Enforcement of the Judgments Against Real Estate||
Last updated: August 2006
Under Illinois law, an unpaid judgment can become a lien on real estate that you own in Illinois. A judgment lien allows the creditor, under the right circumstances, to force a sale of property. The money from the sale of the property goes to paying off the judgment. The creditor must file certain documents in the county recorder's office in order to get a judgment lien. When a creditor has a judgment lien placed on a property, the creditor can force the property to be sold. However, a creditor can ask the court to have the property sold by the sheriff even without a judgment lien.
There is something called the Homestead Exemption which makes it more difficult for a creditor to sell your property. Even if the real estate is sold, you have certain rights to pay money to get the property back.
A creditor with a lien may be able to force a sale of your property and use the proceeds to pay off the judgment. The creditor can do this even if you owe other creditors money. The lien can remain in effect for 7 years even if the creditor cannot force a sale. This means that you cannot sell the real estate during this time unless you pay the judgment in full. Also an old judgment can be extended or revived up to twenty years.
In Illinois, if you live on real estate as your home, you get the Homestead Exemption. The home cannot be sold to satisfy the lien if the amount of your equity interest (the value of the home - what you owe on the home) in the home is less than the exemption amount.
The value amount of the exemption is $15,000 for a single person, and $30,000 for a married couple who own the home together. This amount must be compared to the debtor's equity interest in the property. The equity interest is the value of the real estate minus any amount you owe on the home. If the equity interest is less than the exemption, there cannot be a forced sale of the house to satisfy the lien.
For example, if a home is worth $85,000, but the sum of $75,000 is owed on the mortgage, the debtor's equity interest is $10,000. If the debtor is married, and both spouses own and live in the residence, their entire interest is protected by their $30,000 exemption. In this example, the home is exempt from forced sale because the debtor's equity interest is less than the allowed exemption.
However, if the amount of the equity interest is greater than the exemption amount, then the home may be sold. The creditor would not get any money from the sale until after the mortgage and any other loans on the property are paid off. Also you must receive the Homestead Exemption. The creditor would have to pay you $15,000 in cash, or $30,000 if you were married. Many creditors do not force a sale because it takes a great deal of effort.
There are other reasons why a creditor might not want to try to force a sale. The creditor needs to pay other costs to sell a property. These costs include advertising, lien searches, and appraisals. There are additional steps and costs that the creditor must take both before and after the sale. Other costs include the cost of a certified copy of the judgment (which must be given to the sheriff), a title report, recording charges, publication expenses, and the sheriff's commission for conducting the sale.
It does not make sense to force a sale unless money will be made off the sale. If you do not have much equity in the home and costs will be high, the creditor will not bother with a forced sale. All of the costs include the above costs, mortgage and loan payments, and the Homestead payment. Also potential buyers will be afraid to buy the home because of Homestead worries and redemption rights (see below).
For these reasons, a creditor usually will not find a forced sale of real estate worth the additional time, effort, and cost involved. In most situations, the creditor will try to find another way to get the money from you.
See Exemptions Which Prevent Creditors From Taking Your Money or Property for more information about exemptions and how to prove them.
The law requires that a creditor make a legitimate effort to serve you with notice of any proposed sale of real estate. The sheriff must publish notice of the sale once a week for 3 weeks in a row in a newspaper in the county where the property is located. A notice is also posted in 3 public places within the county. Usually notice is posted within the sheriff's office and in the courthouse. The notice must have the date, place, and time of the sale. It must say who the creditor is and who the debtor is. After the sale and payment of all costs and expenses, the sheriff will deliver a Certificate of Sale to the purchaser.
In most cases, even where the creditor has forced a sale of the real estate, you have the right to redeem the property. Redeem means to buy back. You can do this within 6 months from the sale. You need to pay the buyer the amount of money that the buyer paid for the property plus 10% interest annually.
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