Starcevic v. Pentech Financial Services, Inc.

Facts: A creditor is awarded a money judgment and records an abstract of the judgment which attaches to title of a property subject to an existing mortgage. Later, another judgment creditor records an abstract of judgment attaching to title to the property. In a partition action, the original creditor’s lien is established as priority. However, the creditor allows the judgment lien to expire. Later, the owner sells the property, and the sales proceeds are distributed to the lienholders. None of the sales proceeds are distributed to the creditor under their judgment as their judgment lien had expired before the property was sold.

Claims: The judgment creditor seeks to be paid from the proceeds on the property’s sale to satisfy their lien, claiming their lien was still enforceable and they did not need to renew their judgment since the partition action established them as priority over other creditors.

Counterclaim: The other creditor claims the original judgment creditor is not entitled to any of the excess sales proceeds from the property since their judgment expired prior to the sale.

Holding: A California appeals court holds the original judgment creditor is not entitled to any of the excess proceeds from the owner’s property sale since they lost their lienholder interest in the property when they failed to renew their judgment within the statutory 10-year period. [Starcevic v. Pentech Financial Service, Inc., (July 9th, 2021) _CA6th_]

Editor’s note—Judgment liens must be renewed to remain as a lienholder on title to a property. When a judgment is not renewed, a judgment creditor loses their security interest in a property.

Read Starcevic v. Pentech Financial Services, Inc. in full here.

Related Readings:

Legal Aspects of Real Estate

Chapter 30: Clearing a lien-clouded title

Real Estate Principles

Chapter 65: Trust deed characteristics