When it comes to collecting a judgment in Texas, picture this: You’re a contractor who was hired on a job by someone who is flipping a house. The job goes smoothly, and your work is approved, so you have no reason to think you shouldn’t be paid for it. However, while you are still waiting for your proper payment, you find that the owner has moved from your current state to a new one to flip another house. How do you collect on a job where the hiring party moves from one state to another before you’re paid? You need to understand Foreign Judgements to get your answer.
What is a Foreign Judgment?
Normally when you think “foreign,” you think of something from another country like Mexico or Canada. However, when we are talking about judgments, “foreign” means it’s from another state. All states have their own laws and statutes regarding judgments and how they can be collected. Before collecting a judgment in a different state, you must domesticate the judgment in the state you are trying to collect in.
For example, if you obtain a judgment against a person in Oklahoma and the person moves to Texas before you can collect your judgment, you need to domesticate the judgment in Texas before you can collect against that person there. The good news is that all states will honor judgments from other states as long as the domestication process is followed. In fact, once the domestication process is complete, you have an official judgment of that state, just as if you had sued the person in that state and had gotten the judgment there. Let’s learn more about collecting a judgment in Texas.
From “There” to “Here”
The domestication process can vary a little by state, but it’s generally the same. You need a certified copy of the judgment you obtained. Once you have the certified judgment, you must file an application for domestication in the state in which you want to do your collection efforts. It makes it easier if you domesticate the judgment in the county where the person you are trying to collect from is located. You must have an address for the person you are trying to collect against, and it needs to be listed in the application for domestication.
Once the application for domestication is filed, the court clerk sends a copy of the judgment to the person it is being filed against. They are otherwise known as the Defendant. The Defendant has 30 days to object to the judgment being domesticated in the new state. If the Defendant objects, the Court will hold a hearing to determine if the judgment should be entered in the new state. If there is no objection, your judgment will become final 30 days after the notice is sent to Defendant.
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Collecting a Judgment in Texas: What’s Next?
Once you have a judgment, what’s next? Unfortunately, just having a judgment is usually not enough to get paid. It would be best if you took some action to turn that judgment into cash. If you have domesticated your judgment in Texas, the first step you should take is requesting an abstract of judgment from the clerk where your judgment was domesticated. An abstract of judgment is a single piece of paper issued by the clerk with a summary of the judgment: the amount, attorney fees, interest, and the Defendant’s name.
The abstract should be filed in the real property records wherever you think the Defendant owns property or has assets. Once the abstract is filed, it acts as a lien on all property owned by the Defendant in that county. This means the Defendant cannot buy or sell any property without getting a release of judgment. In Texas, your lien cannot attach to the Defendant’s homestead, meaning if your lien comes up and the Defendant is selling their homestead, you must partially release your lien as to the homestead. Texas protects a person’s homestead. After you have filed your abstract, there are other actions you need to take.
It is essential to know how to navigate the law when making sound business decisions. If you are working with individuals who may often move around or don’t have a long history in your current state, you need to understand the function of foreign judgments. Understanding this process and knowing when this would apply and how to contact someone to help you get the ball rolling with them when you find yourself in a predicament could be the difference between seeing your business sink or swim. Our experienced construction attorneys can help you collect what you are owed nationwide!
This article is intended as a general educational overview of the subject matter and is not intended to be a comprehensive survey of recent jurisprudence, nor a substitute for legal advice for a specific legal matter. If you have a legal issue, consult an attorney.