Real Property Liens and The Impact of a Changing Economy presented by: Tex Ritter, Supervising Child Support Attorney, Marin County Fesia Davenport, Attorney IV, Los Angeles County October 22, 2008 CSDA Annual Conference & Training Expo Anaheim, California

October 22, 2008 CSDA Annual Child Support Anaheim, California Training and Expo Overview  Mechanics of Real Property Liens  The Economy – “Woe is Me”  Making the Best of Difficult Times  Alternative Enforcement Avenues

October 22, 2008 CSDA Annual Child Support Anaheim, California Training and Expo What Is A Real Property Lien ?  Generally, a real property lien (“RPL”) is a charge against an interest in real property.  22 CCR §  The purpose of an RPL is to encumber real property so that the interest in property cannot be sold, refinanced, or transferred without first satisfying the lien.

October 22, 2008 CSDA Annual Child Support Anaheim, California Training and Expo Types of RPLs  An RPL can be:  Voluntary - deed of trust  Involuntary - judgment  General - state income taxes  Specific - deed of trust  Installment judgment – based on an order/judgment payable in installments

October 22, 2008 CSDA Annual Child Support Anaheim, California Training and Expo Creating A Real Property Lien  An RPL for support (“RPLS”) is created by recording :  A Notice of Support Judgment (DCSS 0239),  An Abstract of Support Judgment (JCF FL-480),  A certified copy of judgment for child, family or spousal support, or  A Federal Notice of Lien (OMB )  (See CCP )

October 22, 2008 CSDA Annual Child Support Anaheim, California Training and Expo RPLS Without A “Judgment ”  For purposes of creating an RPLS, a judgment is defined as an order for the payment of child, family, or spousal support.  (Fam. Code § 4506, subd. (d).)  Need not have support order reduced to a lump sum figure

October 22, 2008 CSDA Annual Child Support Anaheim, California Training and Expo Abstract vs. Notice  Notice of Support Judgment and Abstract of Support Judgment look similar  Notice has same force and effect as Abstract o (Fam. Code § 4506, subd. (c) )  Differences are: o Notice need not be filed with court o Notice need not be certified by court clerk o Notice lacks date for issuance of Abstract

October 22, 2008 CSDA Annual Child Support Anaheim, California Training and Expo Why Create an RPLS?  In most instances, an LCSA must:  Legal requirement o 42 USCA § 666(a)(4) o 22 CCR §  In many instances, it’s an effective tool o Many times, money will come to the LCSA

October 22, 2008 CSDA Annual Child Support Anaheim, California Training and Expo When Must an RPLS Be Created?  Documents to create lien must be recorded within 45 days of:  Date money judgment/order received by the LCSA  Date case opened to enforce existing child support order/judgment  Date existing order is registered for enforcement  (See 22 CCR § 11613, subd. (a) )

October 22, 2008 CSDA Annual Child Support Anaheim, California Training and Expo Where Must RPLS Be Created?  An LCSA must record a lien in the county:  Where the obligor resides  Where the obligor’s parents reside (if known)  Where the obligor is known to have, or could be reasonably expected to acquire, real property  (See 22 CCR § )

October 22, 2008 CSDA Annual Child Support Anaheim, California Training and Expo Interests Affected By An RPLS  The RPLS attaches to the obligor’s present, future, vested, contingent, equitable or legal interest in the real property situated in the county where the documents were recorded.  (See CCP , subd. (a).)  The RPLS also attaches to an obligor’s interest acquired after the RPLS was created. (Civ. Proc. § , subd. (b).)

October 22, 2008 CSDA Annual Child Support Anaheim, California Training and Expo Amount of RPLS  An RPLS automatically increases with each unpaid matured installment, and/or each interest accumulation.  The lien amount necessary to satisfy an RPLS is equivalent to the sum of:  Amount of all matured installments  Amount of legally authorized interest  Costs, if any  Minus any payments or partial satisfactions  (See CCP )

October 22, 2008 CSDA Annual Child Support Anaheim, California Training and Expo Priority of RPLS  Generally, “first in time” rule applies  (Civ. Code § 2897; CCP )  A RPLS has priority over another lien to the extent that the installments, interests and costs (under the judgment which forms the basis of the RPLS) mature before the other lien is created  (CCP , subd. (e).)

October 22, 2008 CSDA Annual Child Support Anaheim, California Training and Expo Priority of RPLS & Modified Support Orders  When an RPLS has been created by recording an Abstract of Judgment and the underlying support order is modified, the lien extends to the modified amounts.  (CCP § , subd. (d).)  If the monthly support order increases, then the lien for the increased installments has priority starting from the date the modification is effective.  (CCP , subd. (d).)

October 22, 2008 CSDA Annual Child Support Anaheim, California Training and Expo Duration of RPLS  An RPLS remains in effect until the lien is extinguished or satisfied.  (CCP § , subd. (b).)  A judgment for support is enforceable until paid in full. (Fam. Code § 4502.)

October 22, 2008 CSDA Annual Child Support Anaheim, California Training and Expo Acknowledgment of Satisfaction of Judgment  When the judgment, underlying the RPLS, has been satisfied, in whole or part, the LCSA will prepare an Acknowledgment of Satisfaction of Judgment (“ASJ”), as appropriate.  (22 CCR , subd. (a).)  LCSA must file an ASJ with the court and provide the obligor with an ASJ that can be recorded in any county in which an abstract or certified copy of the judgment was recorded.

October 22, 2008 CSDA Annual Child Support Anaheim, California Training and Expo Full Satisfaction  Prepare an Acknowledgment of Satisfaction of Judgment – Full (EL – 100) when:  The obligor has paid all support arrears in full; and  All children in the support order have been emancipated (22 CCR § 11632, subd. (c)(1);  Or when the LCSA determines it would be appropriate to do so.

October 22, 2008 CSDA Annual Child Support Anaheim, California Training and Expo Partial Satisfaction  Prepare an Acknowledgment of Satisfaction of Judgment – Partial when:  Arrears owed but no ongoing support installments are ordered, but  Support could be ordered in the future: o e.g. court reserved jurisdiction over issue of support o e.g. court issued order specifying no support due from either parent  Idea is the amount owed as of a particular date is known, but the principal arrears balance could increase if monthly installments are ordered at a future date

October 22, 2008 CSDA Annual Child Support Anaheim, California Training and Expo Matured Installment  Appropriate when all matured installments plus all accrued interest have been paid, as of the date specified in the demand.  CCP ; 22 CCR , subd. (d)  Under State regulation, this document is appropriate when all arrears have been paid in full, and at least one of the children named in the judgment is a minor.

October 22, 2008 CSDA Annual Child Support Anaheim, California Training and Expo Release of Lien  A Release of Lien (DCSS 0240) is prepared when the LCSA is no longer claiming any interest in the real property of the obligor in the county where the release is recorded.  A Release of Lien is not an indication of whether the judgment has been satisfied.  Release of Lien authorized by CCP §

October 22, 2008 CSDA Annual Child Support Anaheim, California Training and Expo General Release  Release directed to all property of a person situated in the county where the RPL documents were recorded  Appropriate when:  RPL attaches to property of a person who is not the support obligor;  Court order to release lien;  Case closure and LCSA determines that arrears which it enforced are paid in full;  22 CCR

October 22, 2008 CSDA Annual Child Support Anaheim, California Training and Expo Specific Release  Release directed to a specific parcel of property situated in the county where the RPL documents were recorded  Appropriate where:  LCSA receives request from title/escrow company or from obligor and arrears enforced by the LCSA have been paid in full  Similarly named property owner  22 CCR , subd. (d)

October 22, 2008 CSDA Annual Child Support Anaheim, California Training and Expo Subordination  Process of establishing or re-establishing priority between liens, encumbrances, interests and claims to real property  Authorized by Civ. Code § 2934; CCP §  Can be a powerful tool in today’s mortgage market

October 22, 2008 CSDA Annual Child Support Anaheim, California Training and Expo Walk Down Memory Lane  Remember when:  Requests for demand fairly regular occurrence  Challenge was ensuring timely response to requests  Collections from RPLS were on the rise

October 22, 2008 CSDA Annual Child Support Anaheim, California Training and Expo We’re Not In Kansas Anymore  National Economic Occurrences  Sub-prime mortgage crises  Increase in gas prices  Job losses  Affect on Real Estate/Mortgage Industry  Stricter underwriting requirements  Less consumer demand for refinances  Decline in home values

October 22, 2008 CSDA Annual Child Support Anaheim, California Training and Expo The Well Has Run Dry  The amount of money the state has collected from real property liens has declined dramatically.

October 22, 2008 CSDA Annual Child Support Anaheim, California Training and Expo New Attitude re Subordination  More likely to be used in today’s market  Things to look for  No cash out  Owner/obligor likely to lose property  Short sale  Would LCSA get any money after a foreclosure sale?

October 22, 2008 CSDA Annual Child Support Anaheim, California Training and Expo Subordination Continued  Policy Questions To Consider  Does the LCSA gain anything by playing hardball?  Is there any value in allowing a transaction to proceed without satisfying the RPLS?  How can LCSA make sure that LCSA not being mislead?

October 22, 2008 CSDA Annual Child Support Anaheim, California Training and Expo Non-Judicial Foreclosure Sales  Deed of trust will contain a provision allowing the trustee to foreclose on the property, without judicial intervention, upon receipt of lender’s notice that the borrower is in default.  Civ. Code § 2924j  If excess proceeds exist after sale, trustee will send notice to all interested parties.

October 22, 2008 CSDA Annual Child Support Anaheim, California Training and Expo Excess Proceeds After Non-Judicial Foreclosure  Trustee will send notice to all persons of the existence of the excess proceeds and notice of right to file claim to all parties who appear to have an interest in the property  If trustee unable to resolve competing claims, trustee will file interpleader action and deposit excess proceeds with court

October 22, 2008 CSDA Annual Child Support Anaheim, California Training and Expo Claiming Excess Proceeds  LCSA must file a timely response  LCSA must ensure that claim does not include charges which accrued after the date of the sale  Sample claim attached

October 22, 2008 CSDA Annual Child Support Anaheim, California Training and Expo Don’t Forget The Old Faithfuls  Notwithstanding the economy, people are still suing and dying  Lien against pending lawsuit  CCP §  Creditor’s Claim in Probate Proceedings  Prob. Code § 9150  Enforcement of Judgment Against Trust  CCP §

October 22, 2008 CSDA Annual Child Support Anaheim, California Training and Expo Personal Property Liens Uncommon Yet Equally Appealing  Judgment lien on personal property can be used to create liens on personal property of self-employed individuals.  The procedure for creating the lien is set forth in CCP section  Generally a form is completed and filed with the Secretary of State.

October 22, 2008 CSDA Annual Child Support Anaheim, California Training and Expo THE END See You Next Year! Tex Ritter Fesia Davenport