Legal Question in Real Estate Law in California

Re: corp. judgment on personal real property?

It seems that the corporation didn't defend the lawsuit. In many cases, plaintiffs will sue the shareholders of the corporation at the same time. Thus, if you, as shareholder, were sued and you didn't defend the action, it is likely that they obtained a judgment against you by default. Then they probably recorded the judgment with the county recorder, which in turn became a lien on real property you own. This may be what happened. If the lien is not valid, you can file a motion with the superior court to have the lien expunged. You can also sue the creditor for slander of title. Or, you can refinance and have the lien paid off at escrow closing and then seek reimbursement from the creditor.

Re: corp. judgment on personal real property?

You should not be liable for the judgment nor should there be a lien against you property, unless the judgment was against you personally. If not, please contact us and we may be able to help you remove it.

Re: corp. judgment on personal real property?

As the previous answers suggest, the starting point is to read the judgment. See if it is against the corporation alone, or if you are named personally.

The second step is to get more particulars about what's been recorded than your bank has given you. All you seem to know now is the amount. Get all the particulars, perhaps directly from the recorder's office.

Since $3,500 exceeds the small-claims jurisdictional limit, this must have been a superior court action. There should be a pretty complete file at the courthouse. Have the clerk let you review the file. Also look for a subsequent suit against you, attempting to "pierce the corporate veil."

There are severe limits on making shareholders or directors liable for corporate debts, especially in a default-judgment setting. However, insiders are quite vulnerable to corporate creditors in one special situation: where the corporation goes out of business (whether through formally dissolving or merely fading into the sunset) and pays salaries, dividends, return of capital or whatever to the insiders while leaving the creditors holding the bag, the officers, directors or whatever other insiders either orchestrated or profited from such preferences will, without doubt, be liable to the non-insider creditors.

However, turning such a liability into a lien will still require a court's judgment.