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Reversal: Man’s death does not moot real estate judgment lien

June 14, 2019

The death of a Rush County man whose parents deeded him and their granddaughter 46 acres of property in 1985 does not moot a judgment lien attached to the property, the Indiana Court of Appeals ruled Friday, reversing the trial court.

Rush Circuit Judge David Northam had issued an order denying Flatrock River Lodge’s motion to execute its judgment lien upon Morris and Tonia Stout’s property they shared as joint tenants with rights of survivorship. In 2016, Flatrock, a health care provider, sued Morris over a debt of more than $39,000 and filed a lis pendens notice with the Rush County Recorder’s Office. Tonia moved to intervene, after which Flatrock and Morris entered into an agreed judgment in which Morris would pay $40,144 plus attorney fees.

Flatrock moved to foreclose on the judgment lien in 2018, but Tonia argued that because she and Morris had acquired title to the real estate as joint tenants with right of survivorship, their joint interest should be treated like a tenancy by the entireties. The Rush Circuit Court agreed, denying Flatrock’s motion and its subsequent motion to correct error.

Two months after Flatrock appealed last year, Morris died, leading Tonia to also argue that because of his death, Flatrock’s appeal was moot.

The COA disagreed, reversing the trial court in Flatrock River Lodge v. Morris Stout and Tonia Sue Stout, 18A-CC-1919. “We hold that Flatrock’s appeal is not moot and that the real estate is not exempt from execution on the judgment lien,” Judge Edward Najam wrote for the panel.

“Tonia asserts broadly and without qualification that “the law is clear that jointly held property is exempt from execution,’” Najam wrote, noting she asked the court to apply the exemption statute under Indiana Code § 34-55-10-2(c)(5). “…We decline Tonia’s invitation to read words into the statute that are not there, and we hold that subsection 2(c)(5) does not exempt from execution interests held in a joint tenancy with right of survivorship.

“Indeed, the differences between a tenancy by the entireties and a joint tenancy with right of survivorship are clear and well-established. In a tenancy by the entireties, one spouse may not unilaterally convey or mortgage his interest to a third party. … And an estate by the entireties is immune to seizure for the satisfaction of the individual debt of either spouse. … In contrast, a joint tenant may alienate his interest in real estate or his interest may be alienated by another.

“…Had the legislature intended to exempt from execution real estate owned as joint tenants with right of survivorship it would have done so. We hold that the trial court erred when it denied Flatrock’s motion to execute on its judgment lien.

“In sum, Flatrock’s judgment lien against Morris was a valid and subsisting lien upon his interest in the real estate, which he owned with Tonia as joint tenants with right of survivorship. The judgment lien was not extinguished when Morris died,” Najam concluded. “As the surviving joint tenant, Tonia acquired Morris’ interest in the real estate by operation of law, subject to the lien. The lien is subject to execution and judicial foreclosure in the manner provided under Trial Rule 69. And, if another party is the purchaser of Morris’ interest at an execution sale, Tonia and the purchaser will each own an undivided interest as tenants in common.”

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