Legal Definitions - unsatisfied-judgment fund

An unsatisfied-judgment fund is a special pool of money, often established by a government or a professional organization, designed to compensate individuals who have won a court judgment but are unable to collect the money from the person or entity ordered to pay it. This typically occurs when the judgment debtor (the party ordered to pay) lacks sufficient assets, insurance, or simply refuses to pay, leaving the winning party (the "judgment creditor") without the compensation they are legally owed. The fund acts as a safety net, ensuring that victims are not left without recourse even if the responsible party cannot or will not fulfill their legal obligation.

Here are some examples to illustrate how an unsatisfied-judgment fund works:

• Motor Vehicle Accident Compensation: Imagine a pedestrian, Sarah, is severely injured when hit by a car. A court finds the driver, Mark, fully responsible and awards Sarah $150,000 for her medical expenses, lost wages, and pain and suffering. However, Mark was driving without insurance and has no significant personal assets to pay the judgment. In a state with an unsatisfied-judgment fund for motor vehicle accidents, Sarah could apply to this fund to receive the compensation she is owed, because her judgment against Mark remains unpaid and uncollectible from him directly. The fund steps in to ensure she is not left without recourse despite Mark's inability to pay.

• Real Estate Fraud Recovery: Consider a homeowner, David, who discovers that his real estate agent, Lisa, intentionally misrepresented the condition of a property during a sale, leading David to incur $80,000 in unexpected repair costs. David sues Lisa and wins a court judgment for this amount. Unfortunately, Lisa declares bankruptcy and has no assets or professional liability insurance to cover the judgment. Many states maintain a real estate recovery fund (a type of unsatisfied-judgment fund) specifically for victims of real estate agent misconduct. David could petition this fund to recover his $80,000, as his judgment against Lisa is unsatisfied.

• Client Protection from Attorney Misconduct: Suppose a client, Emily, entrusts her attorney, Robert, with a significant sum of money for a specific legal transaction. Robert, however, misappropriates the funds for his personal use. Emily sues Robert and obtains a judgment for the stolen amount, say $200,000. Robert is subsequently disbarred and has no assets to repay Emily. In many jurisdictions, the state bar association or a similar body maintains a client protection fund (another form of unsatisfied-judgment fund). Emily could apply to this fund to be reimbursed for her financial loss, as her judgment against Robert is unsatisfied due to his inability to pay.