Perfecting and Renewing Judgment Liens

by Jones, Skelton & Hochuli, P.L.C.
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A judgment is only as good as your ability to get it satisfied. That means you need to ensure that your judgment is properly recorded and turned into a valid lien. This memorandum sets forth the general requirements for creating and renewing judgment liens in Arizona.

  1. Judgment Liens Generally

The holder of a judgment (called a “judgment creditor”) may place a lien on the debtor’s real property. This lien gives the judgment creditor the right to sell the debtor’s property to satisfy the judgment. Freeman v. Wintroath Pumps—Div. of Worthington Corp., 13 Ariz. App. 182, 184, 475 P.2d 274, 276 (1970). Also, if the debtor sells the property, the buyer takes the property subject to the judgment lien so long as the buyer has either actual or constructive notice of the lien. Id.

In general, the date the lien is recorded determines whether it has priority over other lienholders. In re Farnsworth, 384 B.R. 842, 848 (Bankr. D. Ariz. 2008). It is therefore important to promptly and properly perfect your judgment lien. Strict compliance with the statutory requirements is necessary to perfect a valid judgment lien. Bryan v. Nelson, 180 Ariz. 366, 369, 884 P.2d 252, 255 (Ct. App. 1994); Nationwide Mut. Ins. Co. v. AHCCCS, 166 Ariz. 514, 517, 803 P.2d 925, 928 (Ct. App. 1990).

  1. Requirements for CREATIng and Amending a Judgment Lien
    1. Creating a judgment lien

To create a judgment lien, a certified copy of the judgment must “be filed and recorded in the office of the county recorder in each county where the judgment creditor desires the judgment to become a lien upon the real property of the judgment debtor.” A.R.S. § 33-961(A). The certified copy of the judgment must set forth the:

1. Title of the court and the action and number of the action;

2. Date of entry of the judgment and the docket record thereof;

3. Names of the judgment debtor and judgment creditor;

4. Amount of the judgment; and

5. Attorney of record for the judgment creditor.

A.R.S. § 33-961(A)(1–5). Once the judgment is recorded pursuant to § 33-961(A), it becomes a lien on the property and “the judgment creditor may satisfy the judgment by executing on any real property that is then owned or later acquired by the judgment debtor.” Lewis v. Debord, 236 Ariz. 57, ¶ 8, 335 P.3d 1136, 1139 (Ct. App. 2014) (internal quotation marks and citations omitted). The judgment debtor retains full power to sell his or her real property, but any subsequent purchaser who has notice of the judgment lien takes the property subject to the lien. Id. ¶ 9.

A money judgment (or its renewal—see below) must be accompanied by a separate “information statement” in accordance with A.R.S § 33-967. See A.R.S. § 33-961(C). The information statement must contain all of the following information if known or available to the judgment creditor from its records, its attorney’s records, or the court records in the action in which the judgment was entered:

1. The correct name and last known address of each judgment debtor and the address at which each judgment debtor received the summons by personal service or by mail;

2. The name and address of the judgment creditor;

3. The amount of the judgment or decree as entered or as most recently renewed;

4. If the judgment debtor is a natural person, the judgment debtor’s social security number, date of birth and driver license number[1]; and

5. Whether a stay of enforcement has been ordered by the court and the date the stay expires.

A.R.S. § 33-967(A), (B). If any of the required information is not known, the judgment creditor shall so state. A.R.S. § 33-967(B). Blank and sample forms of a “Judgment Creditor’s Separate Information Statement” are attached to this memorandum.

  1. Amending a judgment lien

If a money judgment or judgment renewal was filed without the separate statement prescribed by A.R.S. § 33-967(A), the judgment or judgment renewal may be amended by recording a document entitled “amendment to recorded judgment” in compliance with that section. “The amendment to recorded judgment shall state the date of recording and the indexing or document number of the official records of the county recorder for the original recorded judgment or decree and any renewals.” A.R.S. § 33-967(C).

Amending a judgment lien affects its priority date. The priority for a money judgment or renewal is the date of compliance with the information statement requirement. A.R.S. § 33-967(D). The Arizona Court of Appeals recently held that a judgment creditor’s failure to attach an information statement does not affect the judgment lien’s validity but does affect the lien’s priority vis-à-vis both competing lienholders and subsequent purchasers. Lewis, 335 P.3d at 1142, ¶¶ 17–18. Thus, where a subsequent purchaser acquired an interest in a judgment debtor’s real property after a judgment creditor recorded a judgment but before the judgment creditor attached an information statement, the resulting judgment lien lost priority and the judgment creditor could not satisfy the judgment by executing on the property. Id. ¶¶ 18–19.

Pursuant to A.R.S. § 33-967(E), recording an amendment does not affect the length of time that a judgment lien is valid, which is generally five years from the date it is recorded. A.R.S. § 33-964(A). (See section V below).

  1. only a final, signed judgment can create a judgment lien.

In Sysco Arizona, Inc. v. Hoskins, 235 Ariz. 164, 330 P.3d 354 (Ct. App. 2014), the Arizona Court of Appeals clarified that only a final, signed judgment can create a judgment lien. The judgment creditor in Sysco recorded a certified copy of an unsigned minute entry awarding it judgment for approximately $400,000 plus interest. An unsigned minute entry is not a final judgment under the Arizona Rules of Civil Procedure. Id., 330 P.3d at 356, ¶ 10; Lamb v. Super. Ct., 127 Ariz. 400, 403, 621 P.2d 906, 910 (1980) (“[A] minute entry, even though incorporating an order, lacks the legal effect of a formal judgment, decree or order, since it is not signed by the court.”). Therefore, recording an unsigned minute entry does not create a valid judgment lien. Sysco, 330 P.3d at 356, ¶ 10.

Because the judgment creditor in Sysco did not record a signed judgment, the creditor did not create a valid judgment lien, and therefore the judgment creditor’s interest was placed last in the line of priority to claim excess proceeds from a trustee’s sale of the debtor’s property. 330 P.3d at 355, ¶ 4. Although the sale yielded $286,177.44 in excess proceeds, these funds were insufficient to pay off prior lienholders, leaving nothing for the judgment creditor. Id. ¶¶ 2, 4.

  1. The judgment UNDERLYING a judgment lien must contain Rule 54(b) or Rule 54(c) Language, whichever is appropriate.

In addition to being signed, a “judgment” that does not dispose of all the claims against all the parties must contain a Rule 54(b) determination or its recording does not create a valid judgment lien. Arizona Farmers Prod. Credit Ass’n v. Stewart Title & Trust of Tucson, 24 Ariz. App. 5, 7, 535 P.2d 33, 35 (1975). Furthermore, although no published decision addresses the issue, Arizona appellate courts would likely hold that a judgment entered on or after January 1, 2014 that does dispose of all the claims against all the parties must contain Rule 54(c) language to create a valid judgment lien: “[N]o further matters remain pending and . . . the judgment is entered pursuant to Rule 54(c).”

  1. In General, Judgments and Judgment Liens must be renewed every five years.

Judgments and judgment liens may be renewed forever if the statutory requirements for renewal are strictly followed. Generally speaking, judgments and judgment liens must be renewed every five years. However, specific types of judgments and judgment liens may be subject to different statutory requirements, a full discussion of which is beyond the scope of this memorandum.[2]

  1. Renewal of judgments

Generally, a judgment is enforceable for five years after its entry. In re Smith, 209 Ariz. 343, 345, ¶ 10, 101 P.3d 637, 639 (2004) (citing A.R.S. § 12–1551(A)). A.R.S. § 12–1551(B) provides two means to extend this enforcement time: either (a) by affidavit or process pursuant to A.R.S. § 12–1612, or (b) by filing a lawsuit on the judgment within the five-year period. See State ex rel. Indus. Comm’n v. Galloway, 224 Ariz. 325, 329, § 14, 230 P.3d 708, 712 (Ct. App. 2010); see also A.R.S. § 12-1611.

To renew a judgment by affidavit, the judgment creditor must file an affidavit setting forth the information required by A.R.S. § 12–1612(B) “within ninety days preceding the expiration of five years from the date of entry of such judgment.” A.R.S. § 12–1612(B). A renewal affidavit filed more than ninety days before the judgment expires is premature and ineffective. Galloway, 224 Ariz. at 329, 230 P.3d at 712. The judgment creditor may file additional and successive renewal affidavits “within ninety days of expiration of five years from the date of the filing of a prior renewal affidavit.” A.R.S. § 12-1612(E). The filing of the affidavit of renewal with the clerk of the court “shall renew and revive the judgment to the extent of the balance shown due in the affidavit.” A.R.S. § 12-1612(D). A sample “Affidavit of Renewal of Judgment” is attached to this memorandum.

  1. Renewal of judgment liens

A judgment lien also is valid for five years, calculated from the date of recording. A.R.S. § 33-964(A). A judgment creditor may renew a judgment lien to extend its effectiveness beyond five years by recording a copy of the affidavit of renewal, certified by the clerk of the court, in the office of the county recorder for each county in which the judgment debtor has property  subject to the lien. A.R.S. § 12-1613(C). In other words, extending a judgment lien beyond the five-year period also requires renewing the judgment by affidavit. See Hall v. World Sav. & Loan Ass’n, 189 Ariz. 495, 502, 943 P.2d 855, 862 (App. 1997). After a creditor records a certified copy of the affidavit of renewal in the county recorder’s office, “the judgment shall be a lien to the extent of the balance shown . . . against all real property of the judgment debtor, except such as is exempt from execution, . . . for a period of five years from the date of docketing the affidavit.” A.R.S. § 12-1613(D).

It is important to note that filing an action within five years, although it renews the judgment, does not renew the judgment lien. Hall, 189 Ariz. at 503, 943 P.2d at 863. A judgment lien can only be renewed by recording a copy of the affidavit of renewal. Id.


[1] The judgment debtor’s social security number shall be included in the separate statement only if it has been provided voluntarily to the judgment creditor by the judgment debtor. A.R.S. § 33-967(B).

[2] For example, a judgment lien for child support as defined in A.R.S. § 25-500 remains in effect until satisfied or lifted. A.R.S. § 33-964(A).

 

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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