Legal Memorandum: Priority of a Judgment Lien as against Other Claims

Issue: Under the common law of any state, does a judgment have priority over other debts other than the earliest debt of an entity that have not been reduced to judgment?

Area of Law: Bankruptcy & Creditors Rights, Litigation & Procedure
Keywords: Priority of judgment liens; Rights of a judgment creditor
Jurisdiction: Arizona, District of Columbia, New York
Cited Cases: 642 P.2d 881; 759 A.2d 169
Cited Statutes: 49 C.J.S. Judgments § 485, at 929 (1947); 46 Am. Jur. 2d Judgments, § 404 (1999)
Date: 01/01/2006

Many states have judgment lien statutes that address priority, so few cases address the priority of a judgment lien as against other claims under common law.  In Sanford v. Bennett, 783 N.Y.S.2d at 425, the court, comparing the rights of a judgment creditor to others’ rights to insurance proceeds, states, without reference to an applicable statute, “even if respondents were able to show an equitable interest in the proceeds, petitioner’s claim as a judgment creditor would still be superior.”  However, in most similar cases, the court refers to a particular statute addressing the lien’s priority. 

Part of the difficulty in arriving at a common-law theory regarding the priority of judgment liens is that a judgment lien is a creature of statute.  Thus, Arizona courts have summarized common law regarding the priority of judgment liens as it relates to conveyances in the real estate context as follows:

ADVANCE d4Judgment liens are derived from statutes which create them. Unless otherwise provided by statute, a judgment lien is subordinate to prior conveyances even where these are not recorded. However, statutes may expressly or by implication require recording of such conveyances if their priority is to be maintained. See 49 C.J.S. Judgments § 485, at 929 (1947) and cases there cited.ADVANCE x468

Rowe v. Schultz, 642 P.2d 881 (Ariz. Ct. App. 1982) (internal references omitted).

Also, in the real estate area, a judgment creditor’s rights are generally inferior to a mortgagee’s prior equitable rights.  Watergate West, Inc. v. Barclays Bank,