12/04/2023
DOMESTICATING A FOREIGN JUDGMENT
How does a creditor enforce a judgment against a debtor who either relocates to another state, or owns property in another state?
If the judgment is not paid and satisfied, can the creditor follow the judgment-debtor across state lines to pursue their assets?
Most states adopted the Uniform Enforcement of Foreign Judgments Act (UEFJA), which establishes guidelines for accomplishing this task. The UEFJA allows a judgment-creditor to domesticate the foreign judgment (meaning a judgment entered out-of-state), for instance to Nevada where it may be enforced as if it were originally rendered by a Nevada Court. The idea behind domestication is rooted in the Constitutional requirement that judgments should be given "full faith and credit" as between the States.
Why Domestication Should Be Considered
When a judgment is entered in one state court, it acts as a lien on all of the real property owned by the debtor in that county. However, in order to enforce a foreign judgment against a debtor in another state, the judgment must first be domesticated to a county where either the debtor resides or owns property. Without following the strict requirements of the UEFJA, and properly domesticating the foreign judgment, the judgment is nothing more than a piece of paper. Domestication is the process that allows a creditor to attach the judgment as a lien to the debtor's property, and otherwise enforce it.
This article is not intended to give, and should not be relied upon for, legal advice in any particular circumstance or fact situation. No action should be taken in reliance upon the information contained in this article without obtaining the advice of an attorney.
The simple act of domesticating the judgment can act as a show of force to a debtor who thinks they are out of the creditor's reach. By showing the debtor that the creditor is willing to pursue recovery across state-lines, domestication efforts can sometimes be used to force a settlement or satisfaction of the underlying debt.
What is Involved?
The process of domesticating a judgment can seem intimidating. While the UEFJA sets out strict guidelines for judgment-creditors to follow, even a slight mistake can render the judgment unenforceable, and any anticipated lien invalid. First, the judgment-creditor must obtain an "authenticated copy" of the foreign judgment. What is considered "authenticated" can vary from jurisdiction to jurisdiction, but typically require an exemplified or "triple-sealed" copy of the original foreign judgment. Second, the judgment-creditor or its attorney must sign a sworn statement (or affidavit) to certify that the judgment is final, has not been paid or satisfied, and the unpaid balance due on the judgment. Third, the judgment-creditor must file the required paperwork with the Clerk of Court, all of which must then be properly served on the judgment-debtor.
Once the judgment-debtor has been served, they have 30 days to respond and move for relief from the judgment. Generally, the judgment-debtor is limited to attacking the judgment in situations where the judgment was obtained through some extrinsic fraud, or that the judgment has been paid and satisfied.
However, not all judgments are created equal. Only certain judgments can be domesticated under the UEFJA. Enforcing foreign domestic orders (e.g., child support, child custody, domestic violence) are governed by a separate set of rules.
Now What?
Once the debtor has been properly served with the Notice of Foreign Judgment and the 30-day response window closes without a filing, the judgment is considered "final" and enforceable in North Carolina. At that time, the judgment-creditor is free to transcribe (i.e., record) the judgment in any other county where it believes the debtor holds property, or begin the ex*****on process. Judgment ex*****on is the vehicle used to have a Sheriff's Department locate and seize the defendant's assets to satisfy the judgment balance.