Vol. 74, No. 6, June 2001

The Child Support Lien Docket

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Wisconsin Complies With Federal Requirement

Chesnik Peterson Constance M. Chesnik, U.W. 1986, is an attorney with the Wisconsin Department of Workforce Development. She has advised the child support program for 16 years and is a frequent lecturer and author on child support-related issues. She is a member of the state and national Child Support Enforcement associations. Lisa A. Petersen, Northern Illinois 1993, practices with Ticor & Chicago Title Insurance Companies in Waukesha.

Wisconsin complied with this federal requirement by enacting 1997 Wisconsin Act 191. The Act created section 49.854 of the Wisconsin Statutes, which provides, in part:

"If a person obligated to pay support fails to pay any court-ordered amount of support, that amount becomes a lien in favor of the department upon all property of the person. The lien becomes effective when the information is entered in the statewide support lien docket ... and that docket is delivered to the register of deeds in the county where the property is located."2

The statute also provides that the Department of Workforce Development (the department) maintain the statewide support lien docket, which must be made available to the Register of Deeds and to the county child support agency of each Wisconsin county and to each state agency that titles personal property.

Unlike judicial liens, establishing a child support lien under section 49.854 is purely an administrative process. Liens are docketed on a statewide electronic Internet-based system maintained by the department in Madison. The docket is transmitted electronically to Registers of Deeds offices in each county. Hence, the liens are effective statewide and not just in a single county. Liens are not recorded in county records, as the lien is not tied to a particular piece of property. Title companies must search the child support lien docket when issuing title insurance, title reports, and abstracts of title. The lien is docketed by the individual's name, date of birth, and Social Security number.

The docket also is accessible via a secured Web site on the Internet at https://www.dwd.state.wi.us/liendocketweb. Access to the Web site requires the use of an access code, which may be obtained from the Register of Deeds office or the Bureau of Child Support. Although access to the child support lien docket is subject to the Open Records law, it is hoped that, by requiring an access code, the confidential nature of personal information can be protected by ensuring that only those individuals with a legitimate need to know are accessing the Web site.

A child support lien becomes effective when it is docketed. The lien has priority over all other liens on the property except taxes, special assessments, purchase money mortgages, construction liens, environmental liens, liens filed or recorded before the child support lien is docketed, and any other lien given priority under the law. The lien is effective for five years from docketing.3

A child support lien does not attach to the marital property interest of a spouse not in title. Nor does the lien attach to property titled in a trust, limited liability company, partnership, or corporation of which the obligor is a beneficiary, member, partner, or shareholder. With respect to jointly held property, a person other than the child support obligor who holds a joint interest in property subject to a lien under section 49.854 may request a hearing to determine the proportion of the property value that is attributable to his or her net contribution.4

Eligibility criteria for placement on the child support lien docket are spelled out in the department's administrative rule DWD 43. Only support-related debts are placed on the docket and only in those cases receiving services under Title IV-D of the Federal Social Security Act. County child support agencies provide IV-D services to anyone receiving public assistance. Additionally, IV-D services are available to anyone completing an application at the child support agency and paying a minimal fee. Support-related debts include child support, family support, and maintenance arrearages, missed payments on past support and birth expense orders, and missed payments on other medical support orders. Interest on arrearages and fees are not included on the lien docket.

Title insurers are discovering that the new child support liens pose practical problems similar to those presented by judgment liens that have been docketed. The fact that this is a statewide, as opposed to a county-based, docketing system likely will increase the incidence of liens appearing against individuals with common names. A landowner may wish to deny that he or she is the debtor named on the lien docket. However, given the contentious nature of child support obligations, it is unlikely that title insurers will accept affidavits from some sellers without verifying the seller's identity. In many instances, lenders will request letter reports in lieu of title insurance. Title companies do not take name affidavits with letter reports. Those reports neither purport to insure title nor to protect against defects or liens. They are merely a report of title. Therefore, common names will show up on them and it will be the lender's responsibility to verify the names on the report.

In the short time since the lien docket became operational, local child support agencies have received several substantial payments. In one case, a title company discovered a lien when a payer living in Indiana attempted to sell property in Wisconsin. The county received a $53,000 payment, which fully satisfied the lien. In many cases, the notice of lien itself has been sufficient to get some recalcitrant obligors to pay their child support arrearages.

Title insurers will continue to find child support judgments in the judgment and lien docket in the clerk's office and they will be raised as exceptions to title. These docketed judgments will appear in those cases where the arrearages either are not sufficient to meet the threshold eligibility for the lien docket, or where a sale is contemplated on a piece of property in which the equity is insufficient to satisfy arrearages both on and off the lien docket.

The lien docket is being implemented in phases. The docket went into production on Oct. 10, 2000. At that time, only obligors with eligible arrearages in excess of $30,000 were placed on the docket. Roughly 6,000 obligors met this criteria. As of May 5, 2001, the threshold has been reduced to $15,000 and approximately 18,000 obligors have been affected. When the lien docket is fully implemented, the threshold eligibility for placement on the docket will be $2,000. Nearly 90,000 obligors currently meet that threshold eligibility requirement. If a child support obligor has multiple cases, the total amount of the arrearages will be combined into one lien amount.

The lien docket will indicate the county or counties from which the lien originated and the county child support agency that has been designated as the contact point for inquiries related to the lien. The lien screen also will contain the obligor's name and date of birth, the lien amount, the lien filing date, end date, and end reason. The lien can end for several reasons. It may expire after five years, it may be satisfied, or the department may withdraw it. The lien also may be released as to a specific piece of real estate if the equity in the property is insufficient to fully satisfy the lien.

A contact agency is identified on the lien docket. That agency is designated to act on behalf of other child support agencies that have an interest in a lien, and is responsible for cooperating with closing agents requesting a release of lien. The closing agent must provide the contact agency with a proposed closing statement, a property tax assessment or recent appraisal, and a title report or abstract before a payment letter for release can be issued. Each local child support agency has its own policy for estimating fair market value, identifying fraudulent transfers, and determining the payment amount that will release the lien.

In addition, each lien will be assigned a unique lien number. The docket can be searched by that number or by last name. The docket also can verify the obligor's Social Security number, although the actual Social Security numbers will not appear on the screen. In addition, a Social Security number may be entered into the computer, and the computer will verify whether or not there is a match.

Due Process

Obligors receiving notice of a lien under section 49.854 have the option of requesting either a court hearing or a financial records and court order review.5 A request for a financial record review must be made in writing to the county child support agency designated on the lien docket within 10 business days of the notice. If a request is timely made, the child support agency must provide the obligor with the relevant financial records, which may include the account history report and any other account records from the period prior to the implementation of the statewide automated child support enforcement system. The child support agency also must provide the obligor with information explaining how to interpret the records and a form the obligor may use to identify any alleged errors in the record.

The obligor has 20 days after receiving the records to allege errors. If the obligor provides a statement of alleged error, the child support agency must review the records and provide a written determination within 60 days of the initial review request. If the obligor disagrees with the agency's determination, he or she may request a court hearing within five days of the date of determination. The sole issue at that hearing is mistake of fact.6

If the obligor does not request a financial record review, he or she may request a hearing within 20 business days of the date of notice.

Satisfaction and Releases

When a lien is paid in full, a satisfaction will appear on the lien docket for six months. Satisfactions will not be recorded in the Register of Deeds offices because the liens are not tied to specific property. The department also will issue partial releases with respect to specific pieces of real estate if it is determined that the property is being sold at or near fair market value. Releases will be mailed to the closing agent for recording with the Register of Deeds. The electronic terminal will not identify whether the lien has been released from a specific piece of property. The Register of Deeds records must be searched for this information on every open lien.

Commitment Procedures

Child support liens will appear on title commitments as numbered exceptions. Neither the homestead exemption nor a discharge in bankruptcy will act to release the property from the lien. Liens can be removed only by payment in full to the department of the child support amount on the lien docket. Satisfaction of the lien will not necessarily satisfy all child support-related obligations because interest, fees, and lump-sum amounts for which no periodic payments have been ordered will not be included on the lien docket. The department will issue binding pay-off letters, which can be requested from the county child support agency. The pay-off letters will be valid for 30 days. Decisions to subordinate the child support lien to refinanced mortgages will be made on a case-by-case basis by the county child support agencies.

Enforcement

The state may choose to enforce a lien by a levy, followed by an execution sale. The execution is conducted in essentially the same manner as an execution on a judgment.7 A key difference is that the homestead exemption does not apply to a support lien, and thus neither do the homestead procedures in Chapter 815. Also, there is no redemption period after the execution sale.

Notice of intent to levy must be served on the obligor and all other owners of the real estate, and is filed with the Register of Deeds. The notice of intent to levy must describe the real estate to which it attaches. Co-owners of the property must respond to the notice. The levy may be contested. Unless the levy is found invalid or the lien is paid, a second "final" notice of intent to seize and sell the property must be sent, not less than 20 business days after service of the notice of intent to levy or the hearing date, if any. This final notice shall state that the department will issue an execution requiring the sheriff to sell the property within 90 days of the date of execution. This final notice also must be recorded with the Register of Deeds. The sale is then conducted and a deed issued by the sheriff to the successful bidder. The department is developing a method by which to release a Notice of Intent if either the support is paid or the execution has been completed.

Conclusion

The Department of Workforce Development soon will begin implementing additional child support enforcement tools mandated by PRWORA, including license suspension and financial institution account seizure. These enforcement tools may be used with obligors who are on the lien docket and who have eligible arrearages in excess of three months' worth of support. Obligors will be able to negotiate alternate payment plans with the county child support agency in order to avoid these additional enforcement tools.

The goal of the child support program is not to punish individuals for nonpayment of support, but rather, to ensure that the children of this state receive financial support. Many of the new enforcement tools became necessary when payers found ways to avoid the traditional enforcement methods. It is hoped that the new enforcement tools will serve to reinforce the importance of financial support in a child's life.

Endnotes

1 PRWORA, P.L. 104-193 (Aug. 1996).

2 Wis. Stat. § 49.854(2).

3 Wis. Stat. § 49.854(12).

4 Wis. Stat. § 49.854(7m).

5 Wis. Stat. § 49.854(3).

6 Wis. Stat. § 49.854(3)(ag).

7 Wis. Stat. § 49.854(7).