Ask any judgment collection agency about debtor real estate, and they will likely tell you it is the most valuable asset for collection purposes. Real estate has intrinsic value that can be leveraged as either direct payment or a highly motivating way to get debtors to pay up through some other means.
As a case in point, Utah’s Judgment Collectors once worked on a case involving a debtor who claimed to have limited resources. The agency’s investigators uncovered a rental property the debtor had not disclosed. Since the property was not exempt from enforcement, the debtor had a decision to make – find a way to pay or risk losing the property. He refinanced the property to pay his debt.
Real estate holdings are such a powerful collection tool that nearly every collection agency prioritizes them. But to use property for collection purposes, it needs to be found. Either debtors need to voluntarily disclose their real property, or investigators need to hunt it down.
Starting With Court-Driven Discovery Tools
Looking for debtor real estate holdings by starting with court-driven discovery tools is not unusual. State laws generally give judgment creditors access to three tools they can use to glean information about assets and income. Those three tools are interrogatories, debtor exams, and subpoenas.
Interrogatories are formal, written questions about the debtor’s finances. They are usually prepared by the creditor’s attorney and delivered to the debtor’s attorney. The debtor is expected to answer the questions within a certain time frame. The questions are also answered under oath.
A debtor exam is similar to interrogatories except that the questions are asked in-person. Debtor and creditor meet at the courthouse or in the office of one of their attorneys. Direct questions are asked and answered under oath.
If a judgment creditor believes third parties, like employers and banks, have relevant information pertaining to debtor assets and income, those third parties can be subpoenaed. Related documents can be subpoenaed as well.
Discovery Beyond Court-Driven Tools
In a perfect world, court-driven discovery would reveal all a judgment debtor’s assets, including real estate holdings. But attorneys tend to advise their clients to provide as little information as possible while still telling the truth. Debtors do not go out of their way to reveal assets they want to protect. Therefore, creditors often need to go on the hunt for real estate holdings.
1. Searching Public Records
Public records are a treasure trove of information on real estate holdings. That is because all property transfers and tax transactions are recorded. The records are available to the general public. Therefore, a skilled investigator will dig into:
• Grantor-grantee indexes under the debtor’s name
• Appraiser and assessor databases
• GIS and tax-roll systems
Most of the records an investigator would be looking at are recorded at the county level. That could mean a lot of digging through dozens of different databases. Fortunately, some states have put together aggregated statewide databases that tie everything together on a single website. Searching becomes easier because all the records are found in one place.
2. Financial Records
Investigators also take a look at financial records. They run credit checks as well as carefully studying bank statements, loan documents, tax records, and other documents that may have been produced during a debtor examination or by way of a subpoena. Financial records often point to real estate transactions that may have remained undisclosed.
The bottom line is that judgment creditors and their investigators have access to multiple tools and strategies for finding real estate holdings. Any real estate they find can be leveraged for collection purposes.