Release of an Abstract of Judgment Lien on the Homestead
Bulletin No. 2018-111
An abstract of judgment ("AJ") creates a lien on the judgment debtor's real property when properly recorded in the real property records where the judgment debtor's land is located, except as to the debtor's homestead property. In that case, the AJ only creates a cloud on title and the lien is unenforceable against the debtor's homestead property. Until the lien is released, however, the AJ will appear as an exception in the Commitment or title policy. In these situations, a partial release of the property from the AJ from the judgment creditor (lienholder) is required to insure without exception.
If such efforts are unsuccessful, however, the Texas Property Code provides a procedure for judgments abstracted on or after September 1, 2007 by which the owner may effectively create a release of the homestead property from the judgment lien that was abstracted.
The Affidavit procedure will serve as a release of the AJ unless the judgment creditor timely files a contradicting affidavit in the real property records of the county in which the homestead property is located asserting:
(A) the Affidavit filed by the judgment debtor is untrue; or
(B) another reason as to why the judgment lien attaches to the judgment debtor's property.
To create the release, the judgment debtor (the homeowner) or his attorney must:
1. Prepare a "Homestead Affidavit as Release of Judgment Lien" (the "Affidavit"). Here is an example of the Affidavit form.
2. Send a copy of the unsigned Affidavit, without attachments, by registered mail or by certified mail, return receipt requested, to each of the following:
(A) the judgment creditor's last known address;
(B) the address appearing in the judgment creditor's pleadings in the action in which the judgment was rendered or another court record, if that address is different from the judgment creditor's last known address;
(C) the address of the judgment creditor's last known attorney as shown in those pleadings or another court record; and
(D) the address of the judgment creditor's last known attorney as shown here in the records of the State Bar of Texas, if that address is different from the address of the attorney as shown in those pleadings or another court record.
3. Thirty-one days after the letters are sent, sign the Affidavit and record it, along with the attachments that establish proof of the date of mailing, in the real property records of the county where the land is located.
Before closing the transaction, the title examiner must:
(A) Review all the documentation
required above, including the initial notice letter(s) and all evidence of mailing, such as return receipt green cards, to make sure that all required notices were mailed;
(B)
Double check that it has been
at least 30 days from the date the letters were mailed;
(C)
Check the real property records
to confirm that the judgment creditor has not filed a contradicting affidavit or another lien claim. The title plant must be certified through the 31st day following the date the letter and Affidavit were mailed; and
(D)
Record the signed Affidavit
, if no controverting affidavit is found in the property records,no sooner than 31 days after the letters were mailed.
NOTE: You cannot close prior to the expiration of the 30-day period and hold funds in escrow. Under Texas Property Code Sec. 52.0012(e), the benefit of the debtor's Affidavit extends to purchasers and mortgagees who actually rely on the debtor's perfected Affidavit in the absence of any recorded controverting affidavit by the creditor. If you close prior to the 30-day period, your purchaser has not closed in reliance on the perfected Affidavit, because it was not of record on the date of closing.
Also note that use of the procedure to remove or ignore an AJ as described in the bulletin must be approved by Underwriting.
Please call or email NITIC underwriting if you have any questions related to an abstract of judgment lien on a homestead or any part of this process.
