(originally published in Summer 2000)
One particular problem often arises in enforcing judgments against judgment debtors who are becoming increasingly savvy at hiding their assets or themselves from creditors. This problem stems from the general rule that a judgment may not be enforced after ten years from the date of its entry, unless, of course, the judgment is renewed. Without renewal, and upon expiration of the ten-year period, all enforcement procedures must cease, and any liens based upon the judgment are automatically extinguished. Thus, this article will discuss how to renew a monetary judgment.
California Code of Civil Procedure, Section 683.020 provides:
|Except as otherwise provided by statute, upon the expiration of 10 years after the date of entry of a money judgment or a judgment for possession or sale of property:|
|(a) The judgment may not be enforced; (b) All enforcement procedures pursuant to the judgment or to a writ or order issued pursuant to the judgment shall cease. (c) Any lien created by an enforcement procedure pursuant to the judgment is extinguished.|
California Code of Civil Procedure (“CCP”) provides an exception to CCP section 683.020’s general rule, by granting relief to those seeking payment on a judgment entered 10 years previous, if the judgment creditor requests a renewal of the judgment Once the application for judgment renewal is filed and granted, the judgment is enforceable for another ten years, pursuant to CCP section 683.120.
The renewal procedure is actually quite simple. CCP section 683.120 provides that a judgment may be renewed simply by filing an application for renewal with the court in which the judgment was entered. When filing this application, the judgment creditor must submit an application fee. The judgment creditor must also file a Declaration if the amount of the judgment renewed is greater than the amount of the original judgment. This may occur when the judgment creditor adds accrued interest, or when costs for enforcing the judgment are added to the original judgment amount. The judgment creditor is allowed to assess the costs of enforcing the judgment, including attorneys fees, to the judgment debtor, pursuant to CCP section 685.040, and section 685.070. These costs are added to the amount of the judgment already owed, and will be submitted to the Court as a Motion for Costs that accompanies the renewal application.
Renewals can be filed with the court as often as necessary to gain satisfaction, pursuant to CCP section 683.130(b). As a general rule of thumb, when the judgment is against real property, the creditor should schedule the judgment renewal well before expiration of the judgment in order to retain a priority position on property against other judgment creditors.
There is also a monetary advantage to renewing judgments. When the judgment is initially filed by the court, the judgment creditor is allowed a return of interest on the judgment, at the rate of 10% per year. When a judgment renewal is filed, the court re-values the judgment principal to include the accrued interest. Thus, when a renewal is filed, the judgment creditor earns interest on the new judgment amount, which includes the prior interest.
There are, however, some limitations to this practice. While there is no limitation on the judgment creditor’s right to renew a judgment, after the first renewal, a second renewal must not be filed within five years from the time the judgment was previously renewed. This prevents the judgment creditor from compounding interest for less than five year terms.
California courts have made renewing a judgment quite easy by almost always automatically granting renewal when a renewal application is received. Therefore, no court order or new judgment is required as the court clerk simply records the renewal of judgment in the court records. CCP section 683.150. CCP section 683.160 also requires the judgment creditor to serve a notice of renewal of the judgment on the judgment debtor. Until the judgment debtor has received this notice, no action, such as enforcement proceedings, may be taken. Sooner or later, however, the debtor will hopefully surface with attachable assets and the money will be collected. Until then it is just a matter of patience.