The Advantage of Indiana Judgment Liens

Simon PLC Attorneys & Counselors – March 2020 Memorandum

The Advantage of Indiana Judgment Liens

Bloomfield Hills, Michigan – A benefit for creditors seeking to enforce judgments in Indiana is the tool known as the judgment lien.  Many of the states in which the Firm practices also provide for judgment liens, but Indiana has two significant advantages:  automatic recordation and the ability to foreclose.   

Judgments in Indiana are generally good for twenty (20) years, after which they are presumed satisfied.  I.C. 34-11-2-12.  That presumption is rebuttable, as some courts have permitted enforcement beyond the twenty-year period upon evidence that the judgment has not been satisfied.

Notwithstanding the twenty-year life span, a judgment creditor seeking to execute on the judgment must obtain leave of court if it has been ten years since a) the judgment was entered, or b) an execution on the judgment has been issued.  I.C. 34-55-1-2. In other words, there needs to be some progress and activity to keep it alive, but it can be resuscitated.    

A judgment from almost any court in Indiana automatically becomes a lien on real property owned by the judgment debtor in that county.  This now includes Small Claims Courts in addition to Circuit and Superior Courts, as they are all considered courts of record.  [Note that Small Claims Courts in Indiana, with jurisdiction up to $6,000 ($8,000 in Marion County, which includes Indianapolis), allow attorneys to appear, which can benefit creditors with small balance claims.]

The judgment lien becomes effective once it “has been duly entered and indexed in the judgment docket as provided by law.”  If the judgment debtor owns real property in a different county than the one in which the judgment was entered, the judgment can be “duly entered and indexed in the judgment docket” of the other county by simply mailing or delivering a certified copy to the clerk of that county.  The fee is nominal, and there is no need to separately record the judgment with the Recorder of either county.  As opposed to the judgment itself, the judgment lien expires ten (10) years after “rendition of the judgment.”  I.C. 34-55-9-2. 

Unlike some other states, an Indiana judgment lien may be enforced by the creditor; you do not have to wait for the property to be sold.  Pursuant to Indiana Trial Rule 69, a judgment lien can be enforced one of two ways:

• Rule 69(A) provides for a writ of execution, by which the property can be sold by the Sheriff, similar to a mortgage foreclosure sale.  The sale cannot occur for at least six (6) months after the judgment has been entered and indexed (has become a lien).
• Rule 69(C) allows for foreclosure of judgment liens in the same manner as mortgages are foreclosed.  Keep in mind that mortgage foreclosure in Indiana is always judicial, so a lawsuit must be filed.  This would be an in rem action to foreclose the judgment lien.  Typically the sale cannot occur for at least three (3) months or more after the filing date.  There is no right of redemption after the Sheriff’s Sale.

Judgment liens have the same priority as any other recorded encumbrance—first in time, first in right.  The Indiana Supreme Court has ruled on a case involving a judgment lien’s priority vis-à-vis other valid liens, such as mortgages.  An ex-wife with a judgment lien refused to subordinate her lien for a bank’s new financing, and the Court of Appeals agreed with the bank and trial court, stating “the taking of a new note and mortgage for the same debt upon the same land will not discharge the lien of the first mortgage unless the parties so intended.”  The bank, trial court, and Court of Appeals all maintained it was simply a refinance of the ex-husband’s line of credit, which was secured by a mortgage with superiority over the ex-wife’s judgment lien. The Supreme Court reversed the Court of Appeals, holding that the requested financing was actually for new debt incurred by the ex-husband.  Accordingly, the ex-wife could not be forced to subordinate her judgment lien.  Johnson v. Johnson, 920 N.E. 2d 253 (Ind. 2010).

Please contact Simon PLC Attorneys and Counselors if you are owed money in the state of Indiana and would like advice on effective tools to collect it. The litigators at Simon PLC are prepared to answer any questions or concerns your organization may have regarding collections in the state of Indiana. Visit the Team at www.simonattys.com for more information.

N.B. Not Legal Advice: Please contact us if you would like to discuss the facts and circumstances of your specific matter. Simon PLC Attorneys & Counselors expressly disclaims all liability in respect to actions taken or not taken based on any or all the contents of this memorandum. The information contained herein may not reflect current legal developments and is provided without any knowledge as to the recipient’s location, industry, identity or specific circumstances. No recipients of this content, clients or otherwise, should act, or refrain from acting, on the basis of any content included in this memorandum without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from an attorney licensed in the jurisdiction for which the recipient’s legal issue(s) involve. The application and impact of relevant laws varies from jurisdiction to jurisdiction, and our attorneys do not seek to practice law in states, territories and foreign countries where they are not properly authorized to do so.