Creditor's Rights Flashcards
What is detinue/writ of attachment?
P obtains a lien on the defendant’s property before judgment to satisfy an anticipated money judgment
What are the grounds for attachment?
- defendant is a non-resident of Virginia
- defendant made or is about to make a fraudulent conveyance
- defendant has removed or is about to remove his property from the state
- defendant has concealed or is about to conceal his property with the intent to hinder or delay creditors
- defendant has left or is about to leave VA with intent to change his domicle
when does the lien attach?
When the sheriff makes a proper levy (takes possession)
When does the attachment lien attach to real property?
- a copy of the attachment is served on the person in possession; and
- the officer’s return (document prepared by the sheriff) describes the property
When is the lien consumated? what does that do?
final judgment makes the lien consumate
consumation gives the creditor priority against third parties back to the time of attachment
what is a memorandum of lis pendens
to be effective against a BFP, creditor must file a lis pendens
- document placed in the real estate recording office indicating that real property is subject to litigation
What does a P need to do to get detinue/writ of attachment?
- file with a judge
- allege specific facts, not blanket allegations
- judge will have an ex parte hearing
- D has 10 days to challenge the lien. D can quash the lien if:
- lien is invalid (proper ground was not laid)
- lien is unsupported
- P is unlikely to prevail in the underlying suit
what are the 5 exceptions from detinue?
- personal injury actions
- tenancy by the entirety property
- homestead exemption
- poor debtor’s exemption
- exemption from garnishment of earnings or wages
What is the homestead exemption from detinue?
VA residents only
$25,000 (residence)
$5,000 any property
$500 every dependent
must file a homestead deed for claimed real estate where it is located
personal property - where debtor resides
takes priority over all creditors
When can the homestead exemption not be claimed
- purchase money mortgage or security interest in property
- spousal or child support allegations
- intentional tort claims IRS claims
What is the poor debtor’s exemption?
everyone can claim this
$1,000 apparel $5,000 goods $10,000 tools of the trade $6,000 vehicles $5,000 heirlooms
What is the garnishment exemption for detinue
garnishments cannot exceed lesser of 25% of wages or amount 40 times the effective federal minimum hourly wage
What is the persona injury exemption?
proceeds are exempted - your body can’t be used to satisfy your creditors
What is the tenancy by the entirety exemption
exempt against all but joint creditors - both real and personal property can be held in the entirety
What is the process of enforcing a money judgment?
a public act is required to give third parties notice of the judgment creditor’s interest in the property. when the public act occurs the creditor’s lien arises
Duration of judgment creditor’s rights
20 years from the judgment if before July 1, 2021 or 10 years if after July 1, 2021
domesticating sister state judgments
(1) register the judgment in the office of the clerk of the court where enforcement is sought; (2) notify the defendant of the registration in writing
Uniform Enforcement of Foreign Judgments Act
What is docketing?
filed with the real estate recording system and becomes visible - public act
- first to docket has priority
How to docket a judgment lien on real estate?
- judgment is automatically docketed by the clerk of the court in the county where the judgment is rendered
- judgment from another county is docketed by filing a copy of the judgment with the county clerk where enforcement is sought
- a judgment lien is a floating lien on all non-exempt real property in the county. automatically attaches to after-acquired property
- lien attaches only to debtor’s interest in property and doesn’t attach to a tenancy by entirety
How long is a judgment lien on real estate docketed for?
20 years but can be redocketed indefinitely
exemption for property sold to third party (real estate judgment liens)
- lien on the judgment debtor’s real property must be enforced within 10 years of the debtor’s sale to any purchaser -creditor must file a lis pendens within 10 year period to enforcce the lien
How to enforce a judgment lien on real estate
credit must bring suit of equity in the city or county where the land is located
chancellor appoints a commissioner to determine ownership and interests in property and conducts a sale of the property
is there a right of redemption in Virginia?
No, once the creditor has a lien, the debtor may not prevent its enforcement by paying the debt
How are priority fights dealt with in real estate liens?
first to attach wins
- unless joined, junior interests are not affected by sale
How are proceeds of the real estate judgment sale distributed?
- costs
- creditors
- jr interests
- debtor
What is a writ of execution/ writ of fi fa?
commands the officer to whom it is delivered to find property of the debtor, seize it and sell it to satisfy the judgment - the lien is created. by a levy on the property by the sheriff (levy = public act)
When must a writ of fi fa be issued?
21 days from the date of judgment unless otherwise instructed by the creditor
What is a levy?
When the sheriff actually seizes the property
What is included in the writ of fi fa
- writ is issued to the sheriff instructing him to levy on tangible personal property in the county
- writ has a return on the back. the sheriff describes the property found and what he did with it, this is then given back to the court
- the sheriff must get the return back in the time listed by the court, usually 90 days or it is void
What are the levy requirements?
- property must belong to the debtor at the time of the levy
- sheriff must seize the property or observe with the power to exercise control
- sheriff must serve a copy of the writ on the judgment debtor
- sheriff must describe the property seized in the return
= sheriff then conducts a public sale
execution against TANGIBLE personal property
writ of execution (fi fa) –> levy –> court –> sale
execution against intangible personal property
lien attaches upon writ of fi fa to the sheriff but cannot be enforced by levy - enforced by writ of garnishment of creditor’s bill good for 1 year
how long is a lien on intangible personal property good for?
1 year
What are examples of intangible personal property?
bank accounts, accounts receivable, wages, causes of action against third parties
how is a writ of garnishment obtained?
issued by the clerk and served on the garnishee on or before the return date on the fi fa - debtor must be given notice
failure to give notice to debtor is ground to quash
what are the options of the garnishee?
intangible personal property
garnishee admits liability - judgment will be entered against them and the money will be surrendered to the court
garnishee denies - gets a mini trial with a jury. the garnishing creditor may claim no greater rights than the debtor
3 forms of intangible personal property not subject to garnishment
- martial bank accounts
- joint bank accounts - only to the extent of the debtor’s interest
- negotiable instruments and stock certificates - need to be levied
What are fraudulent conveyances?
- property that the debtor transferred to hinder, delay, or defraud creditors; and
- gifts made by the debtor while they were insolvent or that render them insolvent
conveyances to hinder creditors are avoided except:
conveyances to a BFP for value and without notice
voluntary conveyances between indebted spouses
presumed to be fraudulent and are voidable at the suit of either existing or future creditors
present creditors and conveyances
avoid voluntary or fraudulent conveyances
future creditors and conveyances
can only attack on actual fraud
transferee with no notice, less than fair consideration
purchaser must give up the property but gets a lien on the amount paid to the debtor
what are badges of fraud?
you can infer fraudulent intent
- renouncing a bequest under a will
- transfers between spouses
- transfers in consideration of support
- lack of consideration
- transferor retaining possession of property
how to set aside conveyances
- judgment creditor - motion to set aside transfer
- proof of fraudulent intent must be clear, cogent, and convincing - general creditor - bill in equity
- one whose claim has not been reduced to judgment
- may file a lis pendens
- court will determine what to do
assignment for liquidating assets?
VA statute - a debtor may transfer all of their property to a third party who sells the property for the benefit of the creditors
- must be recorded to be effective
what is the objective of a mechanic’s lien
give security to those who add value to real property through their labor or materials valued at $150 or more and are properly licensed to do so
who is a mechanic?
those who build, improve, or repair buildings, or do any kind of work to repair or alter personal property
content and requirements of a mechanic’s lien
- file with clerk of the court
- mail a copy to affected owner within 90 days of completion of work or otherwise terminated
- include
- names and addresses of owner
- amount verified
- intent to claim a lien
- description of the property
- date from which interest is claimed
- claimant’s license number
where are mechanic’s liens not permitted?
public buildings
When must a mechanic’s lien be brought?
6 months from the time the memo was recorded or within 60 days of the time the work ended
Mechanic’s lien priority
commences from the time the work was started. takes priority over all liens except for value of the land perfected before work was started
liens for repairs
mechanic’s lien in personal property for just and reasonable charges for alterations or repairs to a piece of personal property
- repairs requested by the owner or person in rightful possession
Recording requirement for mechanic’s lien on personal property
no recording requirement - possession is enough
priority of repairer’s lien
priority over competing security interests if repair was made in the ordinary course of business and property remains in possession
self help for repairer’s liens
yes if value of the property is less than $5,000 - can just sell the car
mechanic’s lien over $5,000 (pp)
creditor’s suit in equity - must join all interest holders
priority of mechanic’s lien over all other liens (pp)
priority date is based on when the work was performed
mechanic’s lien v. mechanic’s lien priority
all have equal priority
- liens on labor have priority over liens based on materials
- subcontractors have priority over general contractors
- personal property: priority is for repairs done in ordinary course of business
