How are proceeds from a judgment lien auction distributed?

• A. Shared equally among all creditors
• B. Execution costs are paid first, followed by liens in priority
• C. Owner receives all proceeds
• D. Distributed to local government first

Answer: (B)

The proceeds from a judgment lien auction are distributed in accordance with the priority of liens and the costs associated with executing the auction. First, execution costs, which can include expenses incurred during the sale process such as advertising, attorney fees, and auctioneer fees, are deducted from the total proceeds. After settling these costs, the remaining funds are distributed in order of the priority of the liens. This means that any liens that were established before the judgment lien must be paid off first, reflecting the legal principle of lien priority in which senior liens are satisfied before junior liens. This method ensures that the rights of creditors are upheld according to their legal standing.