The “Scoop” on Judgment Liens and Real Estate

Happy Monday to you!

Ever since Doug mentioned last week that he talked to Mike Warren about judgments and liens, that is the only thing our office is talking about. Everything I’ve heard this week is about Mike and his work.

You’re probably wondering what Judgment Liens are all about, right? Well, we are working hard to setup a time for Mike to talk to you… but I gave him a call this morning and told him that we need to know more NOW!

So, he gave me an example of how this stuff works:

Let’s say Joe Bob lends $5,000 to his friend Sally to help her remodel her house. They have a signed agreement stating that she will repay him a set payment on the first of every month until the $5,000 is paid off. Unfortunately, Sally doesn’t pay Joe Bob because she spent all her money on the house and has none left.

Obviously, Joe Bob wants to get his money back! So, Joe Bob takes the contract he signed with Sally to his local judge. The judge reviews it and says, “Joe Bob, you are right! Sally owes you this money!”

This is where the judgment comes in…

A judgment is really just a ruling in a court of law. So if a creditor (Joe Bob) is owed money by a debtor (Sally), the creditor takes proof that money is owed to the court and asks for help in getting paid. If the court agrees that the creditor (Joe Bob) is owed the money by the debtor (Sally), then the court issues a “judgment” against Sally.

So Joe Bob now has a judgment against Sally for $5,000. He waits and waits for her to pay him, but she still won’t give him any money! Joe Bob goes to his lawyer to ask for help. The lawyer tells him that the judgment, in simple words, just means that someone agrees that Sally owes him money. The judgment alone cannot force Sally to pay him!

This is where a lien comes in…

“But don’t worry,” the lawyer tells Joe Bob, “We can use the judgment to file a lien against Sally’s house!” So they file with the court to have a lien placed against Sally’s property. A lien is a concrete legal assertion that you have a claim of a specific value against certain property. Joe Bob’s lawyer can tie this lien to Sally’s house only because Joe Bob has a judgment against her.

So, how does this all fit into real estate investing…?

Well, we know that there’s a lien placed on Sally’s house. What you may not know is that because of it, Sally cannot sell or even refinance her house without paying off that lien FIRST.

Well, it turns out that Sally not only didn’t pay Joe Bob, but she ALSO didn’t pay her mortgage company! Seeing that Sally was not going to pay them, the mortgage company forecloses on her house and sells it at auction.

But, what did we just learn about that…?

The house cannot be sold until all the liens against it are settled! And, this means Joe Bob has to be paid before the house can be sold!

But there is something I forgot to tell you! You see, Joe Bob got tired of waiting for his money. He wanted it now! So, he sold it to a savvy investor named Doug for only $1,000 (remember the judgment was for $5,000!). So when Sally’s house was sold at foreclosure, Doug got paid $5,000 PLUS interest!

But guess what? That’s not even the best part! Mike told me that he knows a “special” way that would have enabled Doug to purchase the rights to the lien for only $1. Yes, only ONE DOLLAR!

[Edit: To clarify to the commenters below, this story has been simplified to demonstrate how this process works and makes the assumption that the auction price is high enough to cover the senior lien. As with any investment opportunity you must do your due diligence and make sure you understand the situation!]

With all the foreclosures you probably keep hearing about in the news, just think about how many opportunities there are to apply this technique! Now you know why we’re so excited about this stuff around here!

I wanted to give you the basics of judgment liens in this posting but I haven’t even scratched the surface. Make sure to leave your questions and comments below! And be sure to check back because I’ll continue to post new information and answer questions as they come in.

To Fun, Fortune, and Freedom!

Tim Mai
Lead Mentor
MyHouseDeals.com

P.S. I just got an update from Doug, and it looks like he’s very close to striking a deal to bring Mike on for a webinar sometime next week. Watch for an email with more information soon!

UPDATE (Feb 4th): Great news! Mike has agreed to do a webinar with us! You can find out more here: webinar announcement

ANOTHER UPDATE (Feb 6th) – I have a little surprise for you! I’m not at liberty to say how we got it, but we have an “undercover” video from one of Mike Warren’s recent boot camps, click here to check it out. –Doug

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20 Responses to “The “Scoop” on Judgment Liens and Real Estate”
  1. Dave says:

    Don’t know what state youe talking about but in most if the judgment was Jr. your lien will be whiped out if the mortage company takes the property. You also need to know your statute of limitations on Judgments and leins, they do not last forever.

  2. Les says:

    Why would Joe Bob sell the rights to his lien of $5000 , for $1 ?

    $1 is not much better than $0 !

  3. jamie parker says:

    It is my understanding that the 1st lean holer out ranks everything but taxes, which means that anything below a 1st lean is out of luck in a foreclosure. Therefore the 2nd leanholder often buys the property and resells it at foreclosure to recoup their money. Is that not true?

  4. myhousedeals says:

    Great questions! Keep them coming!

  5. Dennis James says:

    Tim, your information about the second being paid off before the house can be sold at auction is incorrect…..if I were you, I’d remove it immediately because it will mislead alot of people.

    I spent 25 years sueing and obtaining deficiency judgments on borrowers after foreclosure; and collecting on those judgments. You’re right, there’s good money in buying them if you know what you’re doing.

    Good luck with your upcoming webinar… if I can be of any assistance, let me know.

  6. myhousedeals says:

    @Dennis James – Thanks for the GREAT comment! When writing this story I did not make it clear enough that the auction price must be high enough to cover the senior liens.

    I am learning this exciting technique right along with everyone else! This is why Doug and I are working so hard on getting Mike on a call or webinar. So that he can share his knowledge with us first hand!

    – Tim

  7. Eric says:

    Hello Dennis James,

    I would like to talk with you more about judgment liens. I can be reached at econnects@yahoo.com

  8. Kenan says:

    I’ve learned that the primary lien holder or first mortgage takes precedent over any lien with the exception of property tax lien, i.e. 1st mortg bal 150,000.00, 2nd mor bal 20,000.00, prop sells at auction for 139,000.00 1st gets 139. But sometimes it’s worth buying liens, depends on the property value. Questions? How or where do you find those liens?

  9. Scott Phillips says:

    A little misleading. Before you get too excited, Judgment Liens get wiped out at auction!

  10. myhousedeals says:

    @Scott – Thanks for the comment… one thing I wanted to clear up. The junior liens are only wiped out if the auction price is less than the senior liens.

    Now, you may be saying “But, what if my junior lien IS wiped out… haven’t I lost my money?” Well, don’t worry! Mike is going to teach you how to buy the rights to judgment liens using an “option.” This allows you to protect yourself against this type of loss! I don’t want to steal Mike’s thunder, but lets just say its a pretty smart idea. We will get into this and much more soon!

  11. myhousedeals says:

    Big News! Mike has agreed to do a webinar with us and Doug has finalized the date! Click here to see the webinar announcement.

  12. Diana says:

    I have someone who owes me personal property but also has a sizable IRS lien on the house, The equity can sustain both leads how do I push to get them to sell the paid for address and still stay in the loop?

    Diana

  13. myhousedeals says:

    Update (Feb 9th) – We just released a phone call that Doug had with Mike this morning where he explains, in his own words, why it is so important that you join him on the webinar tomorrow. Click here to listen!

  14. myhousedeals says:

    Update: the webinar went great! If you missed it then make sure you catch the replay here.

  15. Linda says:

    Can anyone give me an answer to this question?

    Mike says that 90% of judgements are not recorded as liens. After going through the trouble and expense of getting a judgement against someone, why wouldn’t they immediately go to the next step and get a lien put on their property?

  16. William says:

    Mike program is to sell it’s product I’m retire and could do this all day
    long. Mike spoke at one of his webinars he stated if you do not join his
    $1,900 program as a affiliate you can not make deals with him.

    Affiliate programs are free, and if some one finds a $100,000 deal for you why would you turn them away? I say tweet the deal and make the money pay them a finders fee.

  17. JERRY says:

    HI
    I AM THINKING ABOUT LEARNING HOW TO MAKE MONEY WITH JUDGEMENTS AND LIENS.

    DO YOU HAVE A COURSE OR INFORMATION ON THE SUBJECT.

    LET ME KNOW ASAP.
    THANKS JERRY 954-753-4755 OR E MAIL ME AT JSC7777@AOL.COM THANKS

  18. myhousedeals says:

    Hi Jerry -

    Sorry, but we don’t offer a course on that – we’d recommend that you search on Google to see what is currently out there. Good luck and happy investing!

    The MyHouseDeals.com Team

  19. paul ellingsen says:

    I was wary about warren’s judgement course but I decided to try it since he had a 30 $$ back guarantee. I spent hours following the instructions; it’s a slow lenghty repetitive boring process and to search the majority of county records you need some kind of file number to search records. So there aren’t many county databases you can even search online.

    but I continued on with the process, and after looking at hundreds of judgements, I found 10 or so that were possibilities. But then you have to subscribe to a website service to check for bankruptancies, then another one to locate the debtor. It was so time consuming I hired a Virtual assistant to do the work. Long story short–after spending hours + the VA’s time, I had no qualifying judgements. I concluded either this idea doesn’t work or it just takes so long to find a actionable and profitable judgement that it is not worth it.

    Luckily, I was still within the 30 guarantee period–I thought. Upon contacting warren’s office, I was informed that the 30 days starts on the day you ORDER the product, not when you receive it, and they didn’t ship it for a few days after my order, plus shipping time meant I had only 20 days after receiving it to try the program. On the website it says you have 30 days to try the course, but in the fine print (terms) it says 30 days from the order date.

    the company refused to honor their guarantee for this reason. The customer support person I was dealing with also got unprofessional and gamey with me, also adding to the scam/you lose/they have to deal with angry customers often impression.

    I protested the charges with my credit card company and they said the TERMS take precedence over what is stated on the website so I was out of my $1,000 and hours of my time.

    So my review is the course is over priced at $1000, I don’t think it works (so therefore worthless), and mike warren makes conflicting statements about the warranty to mislead the buyer in the hopes the buyer waits too long to return the product for a refund. If you look at the judgement website, there is no contact / address info anywhere–making it harder to take legal action against this company–and when an online business conceals their contact information, that is usually a bad sign. BEWARE!

  20. myhousedeals says:

    Hi @Paul. Thanks for your comment. We think your story may be helpful to other investors who are thinking about investing in that program. Mike Warren spoke about judgment liens at one of our webinars in February 2009, but we do not carry the product you purchased. We hope you get this situation straightened out soon.