Function

• A filed money judgment creates a lien on any current property you own or real estate you take ownership of while the judgment is legally enforceable. The creditor typically must record the judgment in the land records of the property's county to create a lien, and the lien gives him legal interest in the real estate. If you own or buy property with more than one person, the lien affects your percentage of ownership.
  
  

Effects

• A lien on the property makes mortgaging and selling difficult. You typically must pay the creditor and get the lien released before you sell or get a mortgage. Sometimes a judgment is paid off using sale proceeds. The closing agent holds a portion of the sale money from you and gives it to the creditor. A lien that is more than the value of the home may make the property impossible to sell if you planned to use the money from the sale to pay the judgment.
  
  

Considerations

• Occasionally, a creditor will agree to release real estate from a judgment. A creditor will issue a release if you will not receive any money from the sale. For example, you may get a release if the property goes through a short sale -- sold for less than the balance of a current mortgage -- because you do not pocket any proceeds. Mortgage holders commonly have legal priority as a creditor.
  
  

Misconceptions

• A private creditor, such as a credit card company, typically cannot force the sale of real estate you own to settle a judgment. However, government creditors with special filings, such as the IRS, may seize real estate to settle a debt. You can transfer ownership of the real estate to another person, but that person cannot mortgage or sell the home with an active judgment against a former owner. The new owner typically needs a title search -- a documented history of the home's chain of ownership -- bank loans and the search will show the judgment.