Requests For Payoff Statements

I am not an attorney, I am a Judgment and Collections Broker. This article is my opinion, based on my experience in California, and laws vary in each state. If you need legal advice or a strategy to use, you should contact a lawyer.

In the old days, one of the easiest ways to recover a judgment was recording a judgment lien on a judgment debtor's real estate.

When houses were increasing in price, resales and refinances happened often enough that one could count on getting repaid eventually (often in full), by recording a judgment lien on the judgment debtor's real estate property.

In recent days, many properties are underwater, and recording judgment liens on upside down real estate often ends up being a waste of time and money. However, even these days, some real estate still sells, and get refinanced.

If your lien is recorded properly, you may one day get a letter or a call. Often the debtor or someone working with them on a loan or a sale, may contact you.

Sometimes they may offer to pay in full, other times they will ask or tell you, to settle for pennies on the dollar, to release your judgment lien.

A promise is only an idea, and you require cash. Usually, you will be asked to sign a "release of judgment lien" form, based on a promise to repay you. All payments should come from an escrow fund. If the payment is not originating from an escrow account, be careful.

How could you be sure you will be repaid, and how should you handle this event? Make sure to get paid, before you release a judgment lien, and especially before satisfying a judgment.

In lean times, it is a good policy to compromise when appropriate. If they want to pay 1/2, counter with 15% off, then negotiate, based on the situation of the debtor. "Know when to hold them, know when to fold them". Try to make deals work, but try not to be fooled.

When you are told you must take ten percent of what is owed, or else get nothing, ask what creditors are going to settle for that much.

When you are the only one being warned/asked that you should discount steeply, that might be a danger sign. One idea is to have the goal of only giving breaks to debtors with difficult situations.

Prior to releasing a lien, one should be a party to the escrow, just like a lender. You could bring the lien release to the closing of the escrow, and hand it to them, right after they give you a certified check.

It's usually a good idea to insist on dealing directly with the escrow company. Ask their escrow or title company to send you a demand release request (sometimes called a pay-off statement).

Usually, the escrow or title company will send you a lien release request, or a payment statement request. Fill it out, or make your own answer document for them. Be sure to write, that you'll release the judgment lien and satisfy the judgment, after you are paid in full.

Along with the response to their demand release request, also send the title or escrow company a payoff statement.

A payoff statement should include the balance due as of the date of the statement, and include a daily interest amount, so they may calculate the future balance. If you are the assignee of record, mention that.

Be sure to satisfy the judgment, after you get paid most of what is due. In the world of judgment recovery, being paid 85% of what is due is a big score.

Title companies don't care too much if you satisfy the judgment or release the lien, because they can prove they paid you. However, the laws and ex-debtors do care, so make sure the judgment lien release, and the satisfaction of judgment is done correctly.

To circumvent problems, some judgment creditors add an additional charge, in exchange for paying and working, to take care of all the needed filings and paperwork. When answering a payoff statement or a demand release request, they add their charge, to buy a certified copy of the satisfaction of judgment, and record it at the county recorder, and send the title company a copy of the recorded documents.

Here is an example of a judgment lien release I have used:

Your Name (your capacity - assignee of record or judgment creditor) Your Address Your City, State, Zip Your Email and Phone Number

SUPERIOR COURT OF THE (YOUR STATE) OF YOUR STATE COUNTY OF (YOUR COUNTY), YOUR DIVISION (small claims, civil, etc.)

Case # 123456789 RELEASE OF JUDGMENT LIEN CCP 697.370 Paul Plaintiff vs. Dan Defendant The undersigned hereby releases from the judgment lien described herein, all of the interests in the real property in YOURCOUNTY County, presently owned or hereafter acquired of the herein named debtors subject to the judgment lien.

The lien released, is in the name of Dan Defendant, from the judgment lien recorded February 12, 2009, as instrument number 12-12-121212 as recorded in the office of the County Recorder of YOURCOUNTY County, YOURSTATE, described as:

Lot 17, Tract Number 1111, in the City of DebtorLand, and County of YOURCOUNTY in the state of YOURSTATE, as per the map recorded in book 100, page 199 in the office of the County Recorder of YOURCOUNTY, commonly described as 22222 Defendant Street, Debtorville, CA 99999, having an assessor parcel number of: 33-VAA-99999.

Executed at: __________________________ this 28th day of April, 2010

By: _________________________________ YOUR NAME (Capacity).