Bill Text: CA AB1549 | 2009-2010 | Regular Session | Chaptered
Bill Title: Judgment liens: priority.
Spectrum: Partisan Bill (Democrat 8-0)
Status: (Passed) 2009-08-06 - Chaptered by Secretary of State - Chapter 153, Statutes of 2009. [AB1549 Detail]
Download: California-2009-AB1549-Chaptered.html
BILL NUMBER: AB 1549 CHAPTERED
BILL TEXT
CHAPTER 153
FILED WITH SECRETARY OF STATE AUGUST 6, 2009
APPROVED BY GOVERNOR AUGUST 5, 2009
PASSED THE SENATE JUNE 22, 2009
PASSED THE ASSEMBLY MAY 11, 2009
AMENDED IN ASSEMBLY APRIL 13, 2009
INTRODUCED BY Committee on Banking and Finance (Nava (Chair),
Evans, Fong, Fuentes, Mendoza, Ruskin, Swanson, and Torres)
MARCH 9, 2009
An act to amend Sections 697.530, 697.590, and 700.140 of the Code
of Civil Procedure, relating to judgment liens.
LEGISLATIVE COUNSEL'S DIGEST
AB 1549, Committee on Banking and Finance. Judgment liens:
priority.
Existing law provides that a judgment lien on personal property is
a lien on all interests in specified personal property, including
accounts receivable, chattel paper, equipment, farm products,
inventory, and negotiable documents of title, that are subject to
enforcement of a money judgment against the judgment debtor at the
time the lien is created if a security interest in the property could
be perfected by filing a financing statement at that time with the
Secretary of State, as specified.
This bill would provide, with respect to those judgment liens on
specified personal property, that the judgment debtor or subject
property must be located in this state. This bill would also remove
the requirement that a security interest in the property could be
perfected at the time the lien is created. The bill would exclude
from the operation of these provisions personal property that is
as-extracted collateral, as defined, and timber to be cut.
Existing law provides that priority between a judgment lien on
personal property and a conflicting security interest in the same
personal property shall be determined according to priority in time
of filing or perfection.
This bill would make agricultural liens on personal property also
subject to this provision in determining priority of conflicting
interests, except as provided.
Existing law provides that, in order to levy an execution lien or
attachment lien upon a deposit account, the levying officer shall
personally serve a copy of the writ and a notice of levy on the
financial institution with which the deposit account is maintained,
or shall personally serve the writ and notice of levy to a
centralized location within the county as designated by the financial
institution.
This bill would instead provide that the levying officer shall
personally serve the writ and notice of levy to a centralized
location within the state as designated by the financial institution.
The bill would make other technical and nonsubstantive changes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 697.530 of the Code of Civil Procedure is
amended to read:
697.530. (a) A judgment lien on personal property is a lien on
all interests in the following personal property that are subject to
enforcement of the money judgment against the judgment debtor
pursuant to Article 1 (commencing with Section 695.010) of Chapter 1
at the time when the lien is created if the personal property is, at
that time, any of the following:
(1) Accounts receivable, and the judgment debtor is located in
this state.
(2) Tangible chattel paper, as defined in paragraph (78) of
subdivision (a) of Section 9102 of the Commercial Code, and the
judgment debtor is located in this state.
(3) Equipment, located within this state.
(4) Farm products, located within this state.
(5) Inventory, located within this state.
(6) Negotiable documents of title, located within this state.
(b) If any interest in personal property on which a judgment lien
could be created under subdivision (a) is acquired after the judgment
lien was created, the judgment lien attaches to the interest at the
time it is acquired.
(c) To the extent provided by Section 697.620, a judgment lien on
personal property continues on the proceeds received upon the sale,
collection, or other disposition of the property subject to the
judgment lien.
(d) Notwithstanding any other provision of this section, the
judgment lien does not attach to:
(1) A vehicle or vessel required to be registered with the
Department of Motor Vehicles or a mobilehome or commercial coach
required to be registered pursuant to the Health and Safety Code.
(2) As-extracted collateral, as defined in paragraph (6) of
subdivision (a) of Section 9102 of the Commercial Code, and timber to
be cut.
(3) The inventory of a retail merchant held for sale except to the
extent that the inventory of the retail merchant consists of durable
goods having a unit retail value of at least five hundred dollars
($500). For the purposes of this paragraph, "retail merchant" does
not include either of the following:
(A) A person whose sales for resale exceeded 75 percent in dollar
volume of the person's total sales of all goods during the 12 months
preceding the filing of the notice of judgment lien on personal
property.
(B) A cooperative association organized pursuant to Chapter 1
(commencing with Section 54001) of Division 20 of the Food and
Agricultural Code (agricultural cooperative associations) or Part 3
(commencing with Section 13200) of Division 3 of Title 1 of the
Corporations Code (Fish Marketing Act).
(e) If property subject to a lien under this article becomes a
fixture, as defined in paragraph (41) of subdivision (a) of Section
9102 of the Commercial Code, the judgment lien on that property is
extinguished.
(f) Notwithstanding the filing of a notice of judgment lien,
subject to the provisions of Chapter 6 (commencing with Section
708.010), a person obligated on an account receivable or chattel
paper is authorized to pay or compromise the amount without notice to
or consent of the judgment creditor unless and until there is a levy
pursuant to Chapter 3 (commencing with Section 699.010).
(g) For purposes of this section, whether a person is located in
this state is determined in accordance with Section 9307 of the
Commercial Code, except that the location of a registered
organization, as defined in paragraph (70) of subdivision (a) of
Section 9102 of the Commercial Code, that is organized under the law
of another state is determined without regard to subdivision (e) of
Section 9307 of the Commercial Code.
SEC. 2. Section 697.590 of the Code of Civil Procedure is amended
to read:
697.590. (a) As used in this section:
(1) "Filing" means:
(A) With respect to a judgment lien on personal property, the
filing of a notice of judgment lien in the office of the Secretary of
State to create a judgment lien on personal property under this
article.
(B) With respect to a security interest or agricultural lien, as
defined in paragraph (5) of subdivision (a) of Section 9102 of the
Commercial Code, the filing of a financing statement pursuant to
Division 9 (commencing with Section 9101) of the Commercial Code.
(2) "Perfection" means perfection of a security interest or
agricultural lien pursuant to Division 9 (commencing with Section
9101) of the Commercial Code.
(3) "Personal property" means:
(A) With respect to a judgment lien on personal property, the
property to which a judgment lien has attached pursuant to this
article.
(B) With respect to a security interest, the collateral subject to
a security interest pursuant to Division 9 (commencing with Section
9101) of the Commercial Code.
(C) With respect to an agricultural lien, the farm products
subject to an agricultural lien pursuant to Division 9 (commencing
with Section 9101) of the Commercial Code.
(4) "Purchase money security interest" has the same meaning as
used in Section 9103 of the Commercial Code.
(b) Except as provided in subdivisions (d), (e), (g), and (h),
priority between a judgment lien on personal property and a
conflicting security interest or agricultural lien in the same
personal property shall be determined according to this subdivision.
Conflicting interests rank according to priority in time of filing or
perfection. In the case of a judgment lien, priority dates from the
time filing is first made covering the personal property. In the case
of a security interest or agricultural lien, priority dates from the
earlier of the time a filing is first made covering the personal
property or the time the security interest or agricultural lien is
first perfected, if there is no period thereafter when there is
neither filing nor perfection.
(c) For the purposes of subdivision (b), a date of filing or
perfection as to personal property is also a date of filing or
perfection as to proceeds.
(d) A purchase money security interest has priority over a
conflicting judgment lien on the same personal property or its
proceeds if the purchase money security interest is perfected at the
time the judgment debtor, as a debtor under the security agreement,
receives possession of the personal property or within 20 days
thereafter.
(e) If a purchase money security interest in inventory has
priority over a judgment lien pursuant to subdivision (d) and a
conflicting security interest has priority over the purchase money
security interest in the same inventory pursuant to Section 9324 of
the Commercial Code, the conflicting security interest also has
priority over the judgment lien on the inventory subject to the
purchase money security interest, notwithstanding that the
conflicting security interest would not otherwise have priority over
the judgment lien.
(f) A judgment lien that has attached to personal property, and
that is also subordinate under subdivision (b) to a security interest
in the same personal property, is subordinate to the security
interest only to the extent that the security interest secures
advances made before the judgment lien attached or within 45 days
thereafter or made without knowledge of the judgment lien or pursuant
to a commitment entered into without knowledge of the judgment lien.
For the purpose of this subdivision, a secured party shall be deemed
not to have knowledge of a judgment lien on personal property until
(1) the judgment creditor serves a copy of the notice of judgment
lien on the secured party personally or by mail and (2) the secured
party has knowledge of the judgment lien on personal property, as
"knowledge" is defined in Section 1201 of the Commercial Code. If
service on the secured party is by mail, it shall be sent to the
secured party at the address shown in the financing statement or
security agreement.
(g) A perfected agricultural lien on personal property has
priority over a judgment lien on the same personal property if the
statute creating the agricultural lien so provides.
(h) A security interest in personal property perfected by the
filing of a financing statement under the law of a jurisdiction other
than this state, or perfected by another method pursuant to the law
of a jurisdiction other than this state, has priority over a judgment
lien in the same personal property.
SEC. 3. Section 700.140 of the Code of Civil Procedure is amended
to read:
700.140. (a) Subject to Section 700.160, to levy upon a deposit
account, the levying officer shall personally serve a copy of the
writ of execution and a notice of levy on the financial institution
with which the deposit account is maintained, or shall personally
serve the writ of execution and notice of levy to a centralized
location within this state as designated by the financial
institution. If the writ of execution is received at the designated
central location, it shall apply to all deposit accounts held by the
financial institution regardless of the location of that property.
The execution lien reaches only amounts in the deposit account at the
time of service on the financial institution, including any item in
the deposit account that is in the process of being collected, unless
the item is returned unpaid to the financial institution. This
section does not require a financial institution to designate a
central location for personal service of the writ of execution and
notice of levy.
(b) At the time of levy or promptly thereafter, the levying
officer shall serve a copy of the writ of execution and a notice of
levy on any third person in whose name the deposit account stands.
Service shall be made personally or by mail.
(c) During the time the execution lien is in effect, the financial
institution shall not honor a check or other order for the payment
of money drawn against, and shall not pay a withdrawal from, the
deposit account that would reduce the deposit account to an amount
that is less than the amount levied upon. For the purposes of this
subdivision, in determining the amount of the deposit account, the
financial institution shall not include the amount of items deposited
to the credit of the deposit account that are in the process of
being collected.
(d) During the time the execution lien is in effect, the financial
institution is not liable to any person for any of the following:
(1) Performance of the duties of a garnishee under the levy.
(2) Nonpayment of a check or other order for the payment of money
drawn or presented against the deposit account if the nonpayment is
pursuant to the requirements of subdivision (c).
(3) Refusal to pay a withdrawal from the deposit account if the
refusal is pursuant to the requirements of subdivision (c).
(e) When the amount levied upon pursuant to this section is paid
to the levying officer, the execution lien on the deposit account
levied upon terminates.
(f) For the purposes of this section, neither of the following is
a third person in whose name the deposit account stands:
(1) A person who is only a person named as the beneficiary of a
Totten trust account.
(2) A person who is only a payee designated in a pay-on-death
provision in an account pursuant to Section 18318.5 of the Financial
Code or Section 5140 of the Probate Code, or other similar provision.
