BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 121|
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THIRD READING
Bill No: AB 121
Author: Hernandez (D)
Amended: As introduced
Vote: 21
SENATE JUDICIARY COMMITTEE : 5-0, 6/16/09
AYES: Corbett, Harman, Florez, Leno, Walters
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 74-0, 4/20/09 - See last page for vote
SUBJECT : Judgment liens: continuation of the lien
SOURCE : Author
DIGEST : This bill establishes a process for the
continuation of a judgment lien on personal property, so
that a creditor would not have to file a new lien at the
end of five years.
ANALYSIS : Existing law provides that a judgment lien
against specified personal property of a debtor is created
by filing a notice of judgment lien in the office of the
Secretary of State (SOS). The judgment lien expires at the
end of five years from the date of filing, unless the money
judgment is satisfied or the lien is terminated or
released. (Code of Civil Procedures Section 697.510.)
This bill permits the continuation of a notice of judgment
CONTINUED
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lien filed in the office of the SOS by the filing of a
continuation statement not more than six months prior to
the expiration of the first five-year period. A
continuation statement that is not filed within the six
month period prior to expiration of the five-year period
would be ineffective. A continued notice of judgment lien
is effective for five years commencing on the day that the
notice of judgment lien would have lapsed.
This bill permits the filing of successive continuation
statements for five-year periods commencing on the day in
which the notice of judgment lien would have lapsed absent
the filing of the continuation statement.
This bill defines a "continuation statement" to mean an
amendment to the original notice of judgment lien that
contains the identification (file number) of the initial
notice of judgment to which it relates and that indicates
it is a continuation statement.
This bill provides that the judgment lien created by the
filing of a notice of judgment line in the office of the
SOS is extinguished at the earliest to occur on the
following: (1) the money judgment is satisfied; (2) the
period or enforceability of the judgment is terminated; or
(3) the judgment lien is terminated or released. If the
lien is extinguished, the judgment creditor shall file a
statement of release within 20 days after the judgment
creditor receives an authenticated demand from the judgment
debtor.
This bill provides in the event the judgment creditor does
not file a statement of release after demand was made, that
the person who made the demand may seek n order for release
of the judgment lien upon a noticed motion. If the court
finds that the period of enforceability of the judgment has
terminated, the court shall order the judgment creditor to
file a statement of release or shall itself order the
release of the judgment lien.
This bill requires the court to award reasonable attorney's
fees to the prevailing party in an action brought under
these provisions.
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This bill provides that Sections 9522 and 9523 of the
Commercial Code shall apply to a notice of judgment lien to
the same extent as to a filed financing statement.
This bill authorizes the SOS to promulgate appropriate
forms and to charge the same fees as set forth in the case
of financing statements under the Commercial Code.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 6/19/09)
Business Law Section of the State Bar of California,
Insolvency Law Committee (source)
ARGUMENTS IN SUPPORT : The author's office states, "Under
the present law, a judgment lien creditor can only file a
new lien and lose priority because the new lien does not
relate back to the initial lien. The other alternative for
the lien creditor is to levy on the personal property
assets and dismantle the going concern business. This bill
would allow a judgment creditor to enter into a long term
payment arrangement and allow the judgment debtor to
continue in productive operation."
The Business Law Section of the State Bar, sponsor of this
bill, explains that the current inability of a judgment
creditor to continue a notice of judgment lien "creates a
scenario in which, regardless of the underlying economics,
a judgment creditor may be forced to dismantle a going
concern in order to squeeze whatever value can be had from
the assets while they are still subject to the lien in
order to maintain its priority in distribution proceeds."
The sponsor suggests that amending the statute to permit
the judgment lien to be continued at the end of the initial
five-year period "would open the opportunity for the
judgment creditor and the judgment debtor to enter a long
term payment plan that may permit a research and
development program to come full circle, or a newly planted
orchard to grow to maturity and bear fruit, or a machine
with a thirty-year lifespan to continue to produce widgets
rather than going to the auction block."
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ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Beall, Bill
Berryhill, Tom Berryhill, Blakeslee, Block, Blumenfield,
Brownley, Caballero, Carter, Conway, Cook, Coto, Davis,
De La Torre, De Leon, DeVore, Duvall, Emmerson, Eng,
Evans, Feuer, Fletcher, Fong, Fuentes, Fuller, Furutani,
Gaines, Galgiani, Garrick, Gilmore, Hayashi, Hernandez,
Hill, Huber, Huffman, Jeffries, Jones, Knight, Krekorian,
Lieu, Logue, Bonnie Lowenthal, Ma, Mendoza, Miller,
Monning, Nava, Nestande, Niello, Nielsen, John A. Perez,
V. Manuel Perez, Portantino, Price, Ruskin, Salas,
Saldana, Silva, Skinner, Smyth, Solorio, Audra
Strickland, Swanson, Torlakson, Torres, Torrico, Tran,
Villines, Yamada, Bass
NO VOTE RECORDED: Buchanan, Charles Calderon, Chesbro,
Hagman, Hall, Harkey
RJG:cm 6/19/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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