RENEWING THE JUDGMENT: RENEW IT OR LOSE IT.
As discussed in our article on enforcement of judgments, a judgment allows the creditor to attach assets, garnish wages, sell the debtor’s property, and accrues interest at ten percent per annum. Thus, every seven years, the judgment just about doubles in value and many judgment creditors, unable to collect due to lack of assets owned by a judgment debtor, simply sit back and wait half a decade and then swoop in to attach any assets that the debtor may have accumulated over that time. Increase in equity can also allow a judgment creditor to seize assets that previously did not have sufficient value to generate a return. We have known clients who were patient enough to wait fifteen years and collect a multimillion dollar judgment when the judgment debtor sought to sell once valueless property.
But how long can a judgment creditor hold a judgment before it becomes stale and unenforceable? Each state has its own laws in that regard, ranging from six years to twenty years. It is vital to determine the law in the particular state in which the judgment has been filed.
California allows the judgment to last ten years and it can be renewed for an additional ten years if the creditor files the required forms in a timely fashion. Failure to renew the judgment prior to the ten-year time limit voids the judgment forever.
This article shall describe the applicable law.
The Basic Law:
A California money judgment terminates and is no longer enforceable if the judgment has not been renewed within ten (10) years from the date it was entered. Failure to properly renew the money judgment within ten (10) years, eliminates the ability to collect money on the judgment from the judgment debtor, or otherwise enforce the judgment by sale of assets belonging to the debtor or garnishing his or her wages.
It is important to note that the judgment must actually be renewed, not just applied for renewal, by the time ten years has passed from original issuance of judgment. A pending application for renewal will not be sufficient to renew the judgment. Since some courts can take many months to issue the renewal, the wise judgment creditor begins the process at least six months prior to the ten-year limit.
The process to renew a California money judgment is specified in California Code of Civil Procedure sections 683.010 to section 683.220. The process requires preparing and filing in the court where the judgment was issued an Application For and Renewal of Judgment, paying the filing fee, and preparing and serving a Notice of Renewal of Judgment on the judgment debtor. The notice can be served on the judgment debtor by personal service or first-class mail and proof of service shall be filed with the court.
The application for renewal of judgment requires the following information: (1.) Name and address of judgment creditor or assignee; (2.) Name and last known address of judgment debtor; (3.) case number and title of the court; (4.) Date judgment was entered; (5.) Dates of any subsequent judgment renewals; (6.) Information necessary to compute the amount of the judgment as renewed, including the principal amount of the judgment, accrued interest, costs, and any credits.
Most of this information can be obtained from the Abstract of Judgment that should have been created when the initial judgment was obtained. The Superior Court requires use of the Application For and Renewal of Judgment (form EJ-190) and the Notice of Renewal of Judgment (form EJ-195).
The renewal of judgment will last another ten (10) years, but can be renewed again after five (5) years. Once a judgment has been renewed, it cannot be renewed again until at least 5 years later. The wise judgment creditor will make sure it is renewed at least every 10 years or it will expire.
Note that any liens created by filing and recording an Abstract of Judgment must also be renewed. Merely renewing the judgment will not automatically renew the lien.
Thus, if an abstract of judgment was filed in the county where the judgment debtor owns real property, or if a personal property lien was filed with the California Secretary of State, those liens need to be separately renewed in addition to renewing the judgment. A new abstract of judgment needs to be recorded with the county recorder to secure a judgment lien against the debtor's real property and a new personal property lien must be filed with the California Secretary of State to secure a personal property lien against the judgment debtor after the judgment has been renewed.
When the judgment is renewed, the interest that has accrued will be added to the principal amount owing. From that point on the judgment creditor is entitled to interest on the accrued interest.
It is a remarkable fact that many judgment creditors, after a few years of effort, not only abandon efforts to collect but forget entirely about the judgment and fail to renew. One of our clients called the office seventeen years after obtaining a judgment, claiming he had seen the judgment debtor driving about in a Rolls Royce and wanted to investigate what assets that debtor might have. When we asked him if he had renewed as we had advised many years before, he realized he could do nothing. He has assumed the debtor had filed bankruptcy, He had not but now it was too late.
A good method if you are a frustrated judgment creditor is to place in your calendar every three years another asset search and at least one renewal of judgment to be sought after nine years has passed, accruing the interest in the new renewal judgment.
And if you are a judgment debtor, do not assume that an ancient judgment has “gone away” simply because you have heard nothing from the creditor. He may be waiting to pounce and you would be wise to determine if a judgment remains outstanding against you prior to purchasing a valuable asset.