Legal Question in Real Estate Law in Maryland
Problems arise after refinancing
Refi residence on 4/05 & pd off 2 judgments. In 9/05 rec'd call from person (not atty) representing people whom we have 2nd mtg with on investment property claiming they had a judgment which should have been pd off along w/other 2 judgments in 4/05 & therefore putting them in 1st position on our residence. After many conversations this person now says a full judgment wasn't entered but plans on filing suit & obtaining a declatory judgment. I have been in contact w/new mtg company who refinanced us in 4/05, & settlement office. Mtg co doesn't seem concerned but the settlement atty's office 1st told me only the 2 judgments they pd showed up but later the settlement atty himself called & said there was another judgment that we needed to pay ASAP or we could loose our residence. How do I find out if there IS a judgment, what is a 'declatory' judgment, & if there is in fact one, can this guy force a sale of our home like he says he'll do?
2 Answers from Attorneys
Re: Problems arise after refinancing
Your current loan may be called due in addition to the judgment that you are referring to. This would invariably cause a loss of the property which, by the appearance of your question, was going to occur as a result of the prior two judgments that you paid off.
The judgment may be enforced against the property depending on how it is titled. Maryland provides protection for property titled jointly between spouses where both spouses are not liable for a judgment. Contact an attorney should you require assistance.
Re: Problems arise after refinancing
A declaratory judgment is a decision by a court that resolves a legal dispute. It usually doesn't include an award of money to the prevailing party. However, if someone has a judgment against you for money damages, one of the ways they can collect on that judgment is to file a writ against your property, asking the sheriff to "seize" it and sell it at a public sale. It's really the same procedure as a mortgage foreclosure. However, bear in mind that if you own this property jointly with your spouse, the judgment must be against both of you in order for your residence to be susceptible to a forced sale.
The reason that the settlement attorney wants you to pay this new judgment off is that by failing to discover it in his title search and thereby making sure it was paid off like the other two, your lender's mortgage is now subordinate to the unpaid judgment, which violates the terms of your loan.
The settlement attorney can send you a copy of the newly-discovered judgment. You should have been aware of this, since you should have been served with the suit papers at the time the suit was filed, so you could defend yourself.