BILL ANALYSIS
AB 121
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Date of Hearing: April 1, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 121 (Hernandez) - As Introduced: January 15, 2009
Policy Committee: JudiciaryVote:9-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill allows a judgment lien to be renewed prior to the
five-year expiration of that lien. Specifically, this bill:
1)Provides that a judgment lien may be extended for an
additional five years only by filing with the Secretary of
State (SOS) a continuation statement within the six-month
period prior to the expiration of the judgment lien.
2)Provides that succeeding continuation statements may be filed
in like manner indefinitely.
3)Provides that if a judgment lien is extinguished, the judgment
creditor must file a statement of release with the SOS within
20 days after the judgment creditor receives an authenticated
demand from the judgment debtor, and if a judgment creditor
does not file a statement of release, the person who made the
demand may apply to the court for an order releasing the
judgment lien and, upon presentation of evidence to the
satisfaction of the court, the court shall order the release
of the judgment lien.
4)Provides that the court shall award reasonable attorney fees
to the prevailing party in any action pursuant to this
measure.
AB 121
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FISCAL EFFECT
Minor absorbable costs to the SOS for additional filings offset
by statutory fees for such filings.
COMMENTS
1)Purpose . According to the author, current law permits a
judgment creditor to record a judgment with the Secretary of
State to create a five-year lien on certain personal property
assets of the judgment debtor. Current law does not, however,
permit the judgment lien to be continued through the filing of
a continuation statement, thus the lienholder loses priority
with respect to the debtor's assets at the end of five years.
In this situation, according to the author, a lienholder must
choose to liquidate the property, reapply for the lien and
lose priority, or extinguish the lien. The author explains
that in certain instances, it would be more beneficial to
allow a property, such as a business, to continue existing
since that business might be worth more over a period of time
than if it is liquidated.
According to the sponsor, the Business Section of the State
Bar, in cases involving consensual liens, when a lending
institution requires collateral for a monetary loan,
California provides for a filed financing statement
documenting the agreement that initially remains effective for
five years. However, according to the sponsor, this financing
arrangement may be extended for an additional five years if a
continuation statement is filed. This bill is modeled after
these provisions governing the filing of financing statements.
2)Prior Legislation . This bill is identical to AB 3013 (Levine)
of 2008, which was one of numerous bills summarily vetoed by
the governor without a stated objection. AB 3013 passed this
committee 16-0 and passed the Assembly floor 73-1.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081