Updated 5/22/18: In County Line Holdings, LLC v McClanahan (May 2, 2018, B2778790) 2018 Cal App Lexis 392, the court held that a creditor could enforce a previously recorded judgment lien on a deceased debtor’s property more than 1 year after the debtor’s death.
So you have a money judgment, but the debtor dies before you can collect. Never mind. You still have a judgment lien on the debtor’s estate. Right?
Maybe not. A recent case illustrates the problem. In Torjesen v Mansdorf (2016) 1 CA5th 111, Creditor obtained a $2 million judgment against Decedent. Creditor obtained a writ of execution on real property in Decedent’s revocable trust, but that writ misspelled the name of the trust as Mansford (rather than Mansdorf). A new writ of execution was issued after Decedent’s death.
Claimant filed a third-party claim of ownership but didn’t follow up. The trial court granted Creditor’s petition to invalidate the claim. Two years later, Claimant moved to set aside the judgment. No one told the trial court about Decedent’s death.
Here’s the problem: Following the death of a judgment debtor, a judgment can’t be enforced against the debtor’s property under a writ of execution and the judgment creditor must proceed under the Probate Code. CCP §686.020; Prob C §§9300, 19300.
The appellate court agreed that Creditor enforced the judgment “in a manner that unquestionably was improper.” However, the court held that the trial court order wasn’t subject to collateral attack. The court added: “We might reach a different conclusion if the record showed that [Decedent’s] estate was being administered in probate.”
Whoa. Come again? Actions based on a liability of a decedent must be commenced within one year after the decedent’s death. CCP §366.2. No, you don’t get out of the 1-year limitations period because you had a money judgment. See Dawes v Rich (1997) 60 CA4th 25, 27 (levies of execution were actions within meaning of statute). Creditor needed to make a claim or bring an action against Decedent’s estate within a year after the date of death.
Because there was no probate, this apparently didn’t happen. Therefore, despite the favorable result in this case, Creditor’s claim appears to be time-barred.
What should have happened in this case: When no probate is opened, a judgment creditor should open a probate as “an interested person” and make a claim against the estate. This will toll the statute of limitations until the claim is denied, or deemed denied if there’s no formal response. At that point, the creditor files an action or petition against the personal representative or trustee of the decedent’s estate or trust.
Collecting the debt may still be difficult if the trustee has distributed trust assets to the beneficiaries in the meantime, but that’s another story. For a detailed discussion of this problem in a trust context, turn to CEB’s California Trust Administration §§10.79–10.88. Also check out CEB’s California Decedent’s Estate Practice §§29.64–29.73.
Other CEBblog™ posts you may find interesting:
- Demanding Debt Payment
- Enforcing a Judgment That’s Expired? You May Still Be in Luck
- Does Bankruptcy Affect Support Obligations?
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