Sarah was renting her townhouse to John and a written lease was concluded. During the negotiations, Sarah made use of a rental agent who performed the necessary due diligence and obtained John’s FICA documents. John lived in Sarah’s townhouse, paying his monthly rental for around 6 months before he started defaulting on a regular basis. On month 11 of the lease, John suddenly moved out of the townhouse, leaving four months’ worth of rental monies outstanding.
Sarah instructed an Attorney and obtained judgment against John, but John is a difficult guy to find as he usually rents properties and suddenly vacates, leaving a trial of debt in his wake. John is also very much aware of his mounting judgment debts and evades the sheriff and tracers that attempt to find his most updated information.
Sarah is at her wits end! What on earth does she do with this judgment against John? Will she ever see the money? Let us find out!
How does execution of judgments work?
In accordance with section 68 of the Magistrate’s Court Act, 32 of 1944; once judgment is granted, the creditor may issue a warrant of execution against the debtor’s movable assets. This warrant is usually directed at all movable assets and executable at the debtor’s place of residence. This is because the debtor usually has most of his or her movable assets at such place of residence. It must however be noted that, the sheriff cannot attach any and all assets that the debtor owns in this respect. See our previous article on what the sheriff may attach in satisfaction of a warrant.
What very often happens, is that a debtor will not own sufficient movable assets to cover the judgment debt, or that the sheriff is not able to make an attachment at all. Fortunately, it is possible to enforce Court Orders against bank accounts.
Why would the sheriff not be able to attach?
Many debtors have multiple judgments granted against them and have become quite expert in evading the sheriff and execution of warrants. If the sheriff knocks on the door of a person and asks him who he is, nothing prevents that person from blatantly lying and denying that he is in fact the debtor.
It is also possible that the sheriff attaches movable assets at the place of residence of a debtor, but that a third-party claims that such attached goods are in actual fact their property. This forces the sheriff to launch interpleader proceedings and means that the attachment may either be delayed substantially, or even uplifted.
How can one prevent being left with an empty judgment?
If the initial negotiations are done correctly and you are in possession of the FICA documents of the debtor, you will likely have his or her banking details. Money held in a bank account is an asset, and if the bank account belongs to the debtor- that means that the money in that account belongs to him or her and is capable of attachment in satisfaction of a warrant.
To make use of this you however must sufficiently vet your debtor when the agreement is signed. Banking details may be provided by the debtor and it should be on a letter from the bank itself confirming that it is indeed held by the debtor. There are also tools to ensure that the details are indeed linked to the person you are dealing with, like this website where you can easily verify the details and ensure that the owner of the bank account is indeed the person standing in front of you.
So how do I lay hands on the money in the debtor’s account?
Once you have a judgment against the debtor, your Attorney will issue a warrant for attachment of the money held in the specific bank account as indicated and verified by yourself. The sheriff will then execute this warrant on the bank holding such account, and the account and all funds in it will then be frozen in satisfaction of the warrant. The Attorney will again instruct the sheriff to “remove” the funds attached and the money will ultimately be transferred to you.
If there are insufficient funds held in the account, a further warrant may be executed on the same account at a later stage for money entering the account in the interim; alternatively a warrant can be issued for other movable assets that the debtor may own.
Should you require assistance with debt collection or contractual advice, please give us a call. Obtaining the correct advice in the initial phases of an agreement, may just ensure that you are not ultimately left out of pocket!