January 2010 Vol. 3, No. 11

Underwriters' Bulletin

Claims Corner


Judgment and Lien Searches

When you order or conduct a search, it must include a judgment and lien search on the names of the buyers, sellers, and all parties in title for the past twenty years. ATG requires a twenty-year search because Illinois tax liens have a statute of limitations of twenty years. Observe the following guidelines in determining which names to search:

  1. If a corporation or a limited liability company (LLC) is or was in title, search the corporate or LLC name.

  4. If a partnership is or was in title, search the name of the partnership as well as the names of all partners. If any partner has a judgment or lien recorded against his or her name, contact the Underwriting Department for guidance about whether you need to raise an exception for it.

  7. If a trustee is or was in title, search the name of the trustee and the trust. In addition, if the trust is any type of trust other than an Illinois Land Trust, then search the names of all present beneficiaries of the trust.

  10. If a decedent is or was in title, search the names of the decedent and of all the heirs and devisees, which include all those who would take title to the property via the rules of intestate succession and all those who would take title to the property via the terms of the decedent's will.

  13. If a minor or disabled adult with an open guardianship proceeding is or was in title, search the name of the minor or disabled adult.

For instructions on how to search the names of churches, associations, and other unincorporated organizations, pleasecontact the Underwriting Department.

Confirm that your judgment and lien search has included all possible spellings, variants, nicknames, and initials for the names to be searched. For example, assume for sake of reference that we are searching the names John Public and Patricia C. Public. In that case, John Public, Jon Public, Jonathon Public, Johnathon Public, Jonathan Public, Johnathan Public, J. Public, Patricia Public, Pat Public, Patty Public, and P. Public should all be searched. If a searcher finds a judgment or lien against "John M. Public," or "P.C. Public," those documents should be considered as applying to the search and possible matches to the parties in title. Also the search should include nicknames that begin with different letters than the full name, such as "Bill" for William and "Bob" for Robert. This is particularly important when relying on a computer search.

If you find your searcher has not included all parties and all variants of names that should be searched, contact your searcher to ask that the additional names be searched.

Once you obtain a complete judgment and lien search, it is your responsibility to determine whether the information contained in the search applies to the parties in the particular transaction. Take the following steps to properly make this determination:

1. Thoroughly Review the Judgment and Lien Report

Eliminate judgments and liens where the names do not match the names you are searching, or where the statute of limitations has run. When deciding whether a name matches, please observe the guidelines described below.

2. Raise an Exception When the Search Reveals Possible Judgments or Liens

If the name search of a party presently or previously in title, or the proposed insured, discloses judgments, liens, court proceedings or other matters potentially affecting title to the real estate, but, due to lack of identifying information, you cannot determine whether the matters involve a party in title, raise the following exception on Schedule B of the commitment:

We find judgments, liens, and other matters of record involving a person or persons whose names are similar to ____________. Relative thereto, a Personal Information Affidavit establishing the identity of the above described person must be supplied in order to facilitate the exclusion, if possible, of those items.

3. Collect a Personal Information Affidavit

Then, collect a Personal Information Affidavit, ATG Form 3008, from the person whose name is in question by the time of closing. Confirm that the affidavit is fully completed with all requested information. Examine the Personal Information Affidavit to determine if the judgment or lien actually applies. It may be necessary for you to make further inquiry into the name, address, and place of business, etc., of the judgment debtor to determine whether he or she is the party to the transaction. If you are satisfied that the judgment or lien does not apply to the person in or to be in title, then you may waive the exception for possible judgments and liens. Do not use the Personal Information Affidavit in lieu of a judgment and lien search against a party in title or interest.

The search should reveal names with even major differences from those you are searching. So long as the names are pronounced the same way, you must treat the judgment or lien as a match for the name of the party in title. Thus, for example, a memorandum of judgment against John Smith would be constructive notice as to John Smythe because the spellings are similar. Also, a memo of judgment against Kristina Smith is constructive notice as to Christina Smith, because, although spelled differently, they are pronounced the same. In each case, you would treat the judgment as applying to the party in title.

4. Order Copies of Recorded Judgment or Lien Documents

For all items in the judgment and lien report containing a matching a name, obtain a copy of the recorded document. Do not assume that the judgment has been satisfied or is otherwise not a lien if the amount of the judgment is "0," because usually that amount is not accurate and the amount of the judgment is simply not indexed. Only an examination of the document will reveal the amount of the judgment. Examine the recorded document to determine if it affects the person whose name you are searching. If the document does not allow you to draw an adequate conclusion, you may need to review the court file for the proceeding that produced the judgment, or contact the Underwriting Department to discuss it. Review the statute of limitations for the type of judgment or lien that affects the party in title to determine whether it is still valid. If not, there is no need to raise an exception for it.

5. Raise Exceptions for Specific Judgments and Liens that Apply to the Property

For judgments or liens that you determine do affect title, raise a specific exception for it on the commitment. See the Underwriting Manual for information on how to clear judgments and liens. In general, be aware that the judgment or lien must be either paid from closing proceeds or a release must be produced at closing to waive any exception for a valid judgment or lien. Do not accept a party's word that a judgment or lien has been paid. Always require written proof of payment. Review whether proof of payment is acceptable to rely on with the Underwriting Department if presented with anything other than a release.

Be aware that once a judgment or lien attaches to title to the property, it remains on title, regardless of how many times the property is conveyed, until the statute of limitations period runs. That means that if Jane owns property and Jane gets a recorded judgment against her, Jane cannot convey her interest to John to get rid of the judgment. This is true no matter what deed form Jane uses. This principle is why ATG requires open judgments and liens to be paid or released at closing.

Furthermore, if Jane quit claims to John a short time before a judgment is recorded against her name, you must raise an exception for a possible fraudulent conveyance.

If you have any questions about obtaining and reviewing judgment and lien searches, please contact the ATG Underwriting Department,legal@atgf.com, 217.403.0020, or 312.752.1990, to discuss it.

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[Last update: 1-18-10]