California Assembly Bill AB1549 Introduced / Bill

 BILL NUMBER: AB 1549INTRODUCED BILL TEXT 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 and 697.590 of the Code of Civil Procedure, relating to judgment liens. LEGISLATIVE COUNSEL'S DIGEST AB 1549, as introduced, 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. The bill would exclude from the operation of these provisions personal property that is as-extracted collateral, as defined. 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. The bill would make other technical and nonsubstantive changes. Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no. 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  a   both of the following apply:   (1)     A  security interest in the property could be perfected under the Commercial Code by filing a financing statement at that time with the Secretary of State  :   .   (2)     The personal property is, at that time, any of the following:   (1)   (A)  Accounts receivable  , and the judgment debtor is located in this state  .  (2) Chattel   (B)     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)  (C)  Equipment  , excluding as-extracted collateral as defined in paragraph (6) of subdivision (a) of Section 9102 of the Commercial Code, located within this state  .  (4)   (D)  Farm products  , excluding as-extracted collateral as defined in paragraph (6) of subdivision (a)   of Section 9102 of the Commercial Code,   located within this state  .  (5)   (E)  Inventory  , excluding as-extracted collateral as defined in paragraph (6) of subdivision (a) of Section 9102 of the Commercial Code,   located within this state  .  (6)   (F)  Negotiable documents of title  , excluding as-extracted collateral as defined in paragraph (6) of subdivision (a) of Section 9102 of the Commercial Code, 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) 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  (A) a   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  or (B) a   .   (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   , as  defined in paragraph (41) of subdivision (a) of Section 9102 of the Commercial  Code)   Code  , the judgment lien on  such   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"  means "purchase money security interest" as defined   has the same meaning as used  in Section 9103 of the Commercial Code. (b) Except as provided in subdivisions (d)  and   ,  (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,  whichever is earlier, provided that   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   , as  a debtor under the security  agreement)   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 another jurisdiction, or perfected by another method pursuant to the law of another jurisdiction, has priority over a judgment lien in the same personal property.