Mcle Article: Judgment Liens: the First and Last Step

• Publication year: 2018
• Author: By Joseph Chora

MCLE Article: Judgment Liens: The First and Last Step

Judgment liens are quick, inexpensive and innocuous and can be powerful, durable and devastating.

By Joseph Chora

Joseph Chora is a private investigator as well as an attorney. His practices focuses on judgment enforcement, exclusively. In addition, he performs workplace investigations and other sensitive investigations.

(Check the end of this Article for information about how to access 1.0 self-study general credits.)

Once you have obtained a favorable verdict for a client, whether in state or federal court,¹ and dealt with the post-trial motions, it is time to start thinking about getting your client paid on that money judgment. While each case will require a specific enforcement strategy, almost every plan will include the use of judgment liens.

While there are other liens,² this Article will focus on the three post-judgment liens that have the widest reach and greatest applicability: (1) The J-1 or JLPP Secretary of State lien on business personal property;³(2) The real property abstract of judgment, or the real property lien;⁴ and (3) The secret ORAP (short for "order to appear") lien on all personal property of the debtor.⁵

Utilizing these liens can assist you or your client to enforce your judgment. California is a race-notice state,⁶ meaning usually (there are some exceptions) the first person to file a lien has priority over those who file liens later in time. As with most aspects of the law, there are exceptions, so each case must be dealt with individually.

Each of these post-judgment liens is only valid for a specified amount of time. The J-1 is valid for five years, the abstract of judgment is valid for ten years, and the ORAP lien is valid for one year. Further, these liens are only valid if the judgment is valid, not expired, and not fully satisfied. These liens must be removed if the judgment is deemed invalid, expires, or is fully satisfied. A creditor must also keep in mind that installment judgments affect the Creditor's ability to create liens as well, liens cannot be created under installment judgments until a particular installment has come due.⁷

All three of these liens can be renewed and overlapping liens from the same judgment on the same property relate back to the original date of priority.⁸ It is important to track and extend or renew these liens as it may make the difference between your client getting paid in full or not at all.

J1/JLPP LIEN

This easy and inexpensive lien can be filed with the California Secretary of State for ten dollars to put the world on notice of your judgment lien on a business debtor's personal property. Property subject to this lien are valuable business assets, including accounts receivable, equipment, inventory and negotiable documents of title.⁹ This lien is created by completing and filing the JL1 form found on the California Secretary of State website.¹⁰

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This lien attaches assets in the State of California, and continues in the proceeds of the personal property if those funds are traceable.¹¹ There are exceptions and nuances beyond the scope of this Article, so a close reading of the statute and case law is recommended if this situation arises.

J1 liens are in effect for five years from the date of filing with the Secretary of State and can be renewed an unlimited amount of times.¹² A renewal of a J1, however, can only take place within six months before the expiration.¹³ Indeed, if you are one day late, the lien expires and your client loses his place in line.¹⁴ If you file one day too early, the continuation may be ineffective, and again, your client loses his place in line.

ABSTRACT OF JUDGMENT OR REAL ESTATE LIEN

Obtaining a lien on real property is usually accomplished in a two-step process: First, you submit Judicial Council form EJ-001¹⁵ to the Clerk of the Court that issued the judgment (include self-addressed stamped envelope if you are not using an attorney service). Second, once you receive the issued abstract of judgment, you record that abstract with every county recorder where the debtor has real property,¹⁶ where he might have real property or where you think he may obtain real property in the next ten years.

An abstract attaches to any real property interest of the debtor in any county where an abstract is recorded, whether that interest is present, future, vested or contingent, legal or equitable, with certain exceptions.¹⁷ If the creditor records an abstract in a county and the debtor subsequently acquires a real property interest in that county, the lien automatically attaches to that interest.¹⁸

Real property judgment liens are valid for ten years from the date of entry of the judgment.¹⁹ To renew a real property judgment lien, a creditor must...