Liens and their Releases (In the State)

When buying property, it's important to be aware of any liens that may be attached to it. A lien is a legal claim on a property, usually as a result of an unpaid debt or obligation. Liens can affect a home buyer's interest in a property and can cause financial and legal issues if not properly addressed prior to purchasing the property.

Liens can be placed on a property for a variety of reasons, such as unpaid child support, Medicaid bills, Public Defender bills, or even the judgment resulting from court proceedings. When a lien is placed on a property it becomes encumbered, meaning there is a right to, or interest in, land held by a person other than the fee owner, or a claim, lien, charge or liability attached to and binding real property. At the state level, liens are filed with the Superior Court of New Jersey.

A judgment of the Superior Court becomes a lien upon all of the lands of the debtor (or defendant) in the State of New Jersey, from the time of its entry upon the Superior Court Clerk’s Civil Judgment and Order Docket. This includes final judgments for a fixed amount of money, whether entered into the Law or Chancery Divisions. The lien is purely statutory in nature. An abstract of the judgment must be submitted to the Superior Court Clerk together with the requisite filing fee in order to create the lien (entry upon the minute book of the court clerk of the local county is insufficient). If the judgment abstract is filed in the local county but not submitted to the Superior Court Clerk (with the requisite filing fee) then the lien was never created.

 Judgments entered into the US District Court for the District of New Jersey are treated like judgments entered in the Superior Court of New Jersey. The same applies to judgments entered into the US District Courts of other states as the judgment may be docketed with in the US District Court for the District of New Jersey due to the Uniform Enforcement of Foreign Judgments Act. **In order to discharge the judgment, a Warrant of Satisfaction must be filed with the state. **

Institutional Liens are statutory liens created to enforce the financial obligations of persons suffering from mental or other illnesses who receive treatment at state or county medical facilities. Due to N.J.S.A. 30:4-27.2, state or county owned psychiatric hospitals are no longer allowed to file new liens (and their previously filed liens from before the date of the statute have been extinguished); however, hospitals that are not government-owned, but which receive State subsidies to provide psychiatric or non-psychiatric treatment  can file certificates of debt with the CJ&OD or may choose to reinforce the claim by filing an action in Superior Court in order to reduce the claim to judgment.

Medicaid Liens arise from a program, jointly administered by federal and state governments which provides medical assistance to the needy. As services provided to eligible recipients have proved to be quite expensive imposing  a heavy burden on both federal and state budgets, government agencies have become increasingly aggressive in their efforts to recover funds expended on behalf of Medicaid recipients. To do so they frequently rely on the asset transfer penalty allowing for recovery against real or personal property. A statute provides for the imposition of a lien on the “estate of a deceased recipient” however, if a “deceased recipient” is survived by a spouse or child (under age 21 or disabled), “no encumbrance or recovery shall be imposed or sought” against the until the surviving spouse dies or the child reaches age 21. Furthermore, the Medicaid lien only becomes effective as of the date it is filed with the court.

Public Defender Liens are from the reasonable value of the services rendered to a defendant by a Public Defender. When unpaid, the Public Defender may file a lien on any and all property to which the defendant shall have or acquire an interest. To effectuate such a lien, the Public Defender must file a notice setting forth the services rendered to the defendant and the reasonable value thereof with the Clerk of the Superior Court. The date of filing is the date the lien becomes effective and therefore becomes a lien on said property for 10 years, unless discharged sooner. ***UPDATE***

Real Property generally should not be sold or transferred without satisfying open liens. This means that the seller must pay off  any open liens and file the appropriate documents before transferring ownership to the buyer. A good title company will do extensive research on the property being sold to ensure that there are not open liens that may affect the buyer’s ownership of the property.