Daily Development for Friday, October 22, 1999

By: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri
randolphp@umkc.edu

SLANDER OF TITLE; HOMESTEAD: Filing of judgment lien does not constitute slander of title because a judgment creditor has an absolute privilege to file its judgment lien, even when the property to which the lien attaches qualifies as homestead property.

Borison v. Bank Leumi Trust Company of New York, 972 P.2d 1188 (Okla. Civ. App. 1998).

A judgment creditor obtained a judgment and filed it in the appropriate office to establish a judgment lien. At the time, a judgment debtor occupied certain property as a homestead.

Later the judgment debtor transferred to her son, who also used the property as a homestead. The son later sought to borrow against the property, and discovered that the presence of the lien prevented him from getting a mortgage loan.

Son demanded that the bank disclaim the judgment as a lien against his property, arguing that the lien was unenforceable and therefore constituted a invalid cloud on title. When the bank refused to do so, the son sued the bank for slander of title.

The court reviewed Oklahoma judgment lien law, which has been amended. Under the new statute, a judgment creditor is prohibted from executing upon property while it is occupied as a homestead, but can execute upon property when it ceases being a homestead. Unlike other states, such as Minnesota, reviewed here recently, the statute does not protect the homesteader's right to sell the property free of the judgment lien, even though the homestead protection is for a specified amount.

The court, consequently, held that the question of whether the bank's lien could be enforced immediately was not relevant to a slander of title action, finding no authority that failure to release an authorized judgment lien which has not been satisfied constitutes slander of title. Because the relevant state statute authorized the attachment of the judgment to all of debtors' property, including homestead property, the presence of the judgment lien did not constitute slander of title.

Further, the trial court held that the filing of the judgment lien was not slanderous because it was a privileged act, indicating that any true and correct report of judicial proceeding is a privileged publication and cannot form the basis of a slander of title action.

Comment: The first part of the holding, though interesting, is based upon the special feature of Oklahoma law, which does not provide for homestead protection on resale. The second part of the opinion, providing that a filed judgment is per se not slander of title would be useful even in states where the homestead property would be protected upon resale. In such a state, presumably, a bank might not refuse to loan against the property, assuming that the statute would view a foreclosure as a "sale" within the meaning of the statutory protection. For a recent case answering that question affirmatively, see: NationsBank Mortgage Corporation v. Security Bank & Trust, No. C3 00555 (Minn. App. 10/5/99) the DIRT DD for October 9. With regard to the NationsBank decision, by the way, off list colloquy between the editor and Minnesota lawyers confirmed that the editor had done a terrible job of statutory research and that indeed there is a specific Minnesota statute protecting the homestead on resale - though it doesn't specifically apply to foreclosures).

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