Judgment Lien Buyouts
Many people are familiar with buying discounted trust deeds for high yield investments but don't realize that well selected judgment liens offer excellent yields with a very high degree of security.
Judgment liens in California are good for an initial 10 year period and renewable every 10 years thereafter. When an abstract of judgment is recorded as a general lien against the judgment debtors they will not be able to buy, sell, or refinance any real property in their names in that county, during the life of the lien - not until the creditor's "satisfaction of judgment" is recorded.
In essence the recorded abstract of judgment ties up the debtors' real property indefinitely, preventing them from getting at their ever-growing equity until they pay off the judgment. And if the amount of the judgment is relatively small ($5,000 or less) the debtors will have no incentive to avoid it via bankruptcy.
California judgments earn the legal rate of interest of 10% per annum until paid. Thus a judgment bought for 10% of initial face value would produce, at minimum, an effective yield of 100% per year! Passive investors could play the waiting game and earn that 100% per year until they're finally paid off. Otherwise they could bring things to a head very quickly by promptly executing on the judgment via a garnishment of the debtor's paycheck or grabbing the debtor's bank account or impounding their automobile, etc.
To locate a debtor's assets the judgment creditor could summon the debtor to court for a debtor's exam where, under oath, the debtor is asked a series of questions designed to reveal the existence and whereabouts of any assets belonging to the debtor and his/her employment information. The costs attendant to the whole procedure are added to the outstanding balance of the lien.
Also, it is not necessary, when dealing with small claims judgment liens, to do any title searching of the debtor's property to determine what other recorded liens are senior to the judgment lien. Concerns about the amount of protective equity there might be, or the location or condition of the property can be set aside if the judgment is for the relatively small amount ($5,000 or less) allowed in small claims court. That's because small, insignificant judgments have a high nuisance value. The debtor is literally boxed into paying them off since fighting your collection effort would cost them more than the amount of the debt!
There are literally thousands of judgments just ripe for the picking. Your local Small Claims Court, for example, probably churns out more judgments every year than you could ever possibly buy. And you can go back several years for really stale, "almost worthless" judgments that are easier to buy at deep discounts the older they get.
Small Claims judgment creditors are great to work with too since they are primarily unsophisticated, private parties who are confused and frustrated about how to proceed with their seemingly uncollectible judgments.
Unlike working foreclosures, you could be very successful working judgment liens part-time, with very little amounts of cash. There are no sale deadlines pressuring you like there are with Trustee's Sales. And small judgments involve even smaller buyout amounts and competitors are nowhere to be seen!
Our Judgment Lien Buyout class takes 5 hours and comes with all necessary materials and forms. Tuition for one party is $1,200.00 and drops to $1,000.00 each if the trainee is willing to attend with someone else.
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