Prioritizing Judgment Liens on Personal Property
A. Overview of New Statutory Procedure
The following is an overview of this new statutory procedure for perfecting and prioritizing claims of judgment liens on personal property:
1. Central Data Base. The Florida Department of State is responsible for establishing and maintaining a central database of judgment lien files established in accordance with Section 55.201-.209, F.S. Section 55.201, F.S.
2. Personal Property Interest Covered. The law provides that a judgment lien may be acquired on a judgment debtor’s interest in all personal property in the State subject to execution under Section 56.061, F.S. other than fixtures, money, negotiable instruments and mortgages. Section 55.202(2), F.S.
3. How the Lien is Acquired. A judgment lien is acquired by filing a judgment lien certificate (as opposed to the judgment itself) with the Department of State after the judgment has become final and if no stay of judgment for its enforcement is then in effect. Section 55.202(2)(a), F.S. For any lien, warrant, assessment or judgment collected by the Department of Revenue, a judgment lien may be acquired by filing the judgment lien certificate information or warrant with the Department of State. Section 55.202(2)(b), F.S.
4. Effective Date and Priority of the Lien. The effective date of a judgment lien is the date, including the time of day, of filing. Section 55.202(2)(c), F.S. The priority of the judgment lien is established at the date and time the judgment lien is filed. Section 55.202(3), F.S.
5. The Judgment Lien Certificate-Content, Filing and Indexing. The information that must be included in the judgment lien certificate filed with the Department of State is set forth in Section 55.203(1), F.S. In that regard, the law provides that the Department of State shall prescribe mandatory forms of all documents to be filed under this section. Section 55.203(6), F.S. The Department of State is required to examine “for compliance with Sections 55.201-.209, F.S.” each document submitted for filing and shall accept or reject the document accordingly. Section 55.203(4), F.S. For each judgment lien certificate filed, the Department of State must create a file; assign a file number to the record; including date and time of filing; maintain a data base successful to the public via the internet; and index the judgment lien certificate according to the name of each judgment debtor. Section 55.203(4), F.S. Of note, the law provides that a judgment lien certificate may be effective even if it has minor errors or omissions that make the filing seriously misleading. Section 55.203(5), F.S.
6. Duration of the Judgment Lien. Except for liens securing the payment of child support or tax obligations, a judgment lien is effective for five years from the date of filing of the judgment lien certificate. Section 55.204(1), F.S. At any time within six months before or six months after the scheduled lapse of such judgment lien, the judgment creditor may acquire a second judgment lien by filing a new judgment lien certificate. The effective date of the second judgment lien is the date and time on which it is filed. The second judgment lien is a new judgment lien, and not a continuation of the original judgment lien. The second judgment lien permanently lapses and becomes invalid five years after its filing, and no additional liens based on the original judgment or any judgment based on the original judgment may be acquired. Section 55.204(3), F.S.
Liens securing the payment of child support or tax obligations are effective for 20 years from the date of the original filing of the warrant or other document required by law to establish a lien. As to those liens, no second lien based on the original filing may be obtained. Section 55.204(2), F.S.
The law provides that nothing in this section shall be construed to extend the life of a judgment lien beyond the time that the underlying judgment, order, decree or warrant otherwise expires or becomes invalid pursuant to law. Section 55.204(7), F.S.
7. Continuation of the Judgment Lien. A judgment lien continues only as to itemized property for an additional 90 days after the lapse of the lien, but only if the property had been itemized and its location described with sufficient particularity in the instructions for levy, the levy had been delivered to the sheriff prior to the date of lapse of the lien, and property was located in the county in which the sheriff has jurisdiction at the time delivery of the instructions for levy. Section 55.203(4), F.S.
8. Tolling of the Duration of a Judgment Lien. The date of lapse of a judgment lien whose enforceability has been temporary stayed or enjoined as a result of any legal or equitable proceeding is tolled until 30 days after the stay or injunction is terminated. Section 55.204(5), F.S.
9. Enforcement of the Judgment Lien. A valid judgment lien gives the judgment creditor the right to proceed against the property of the debtor through writ of execution, garnishment or other judicial process. Section 55.205(1), F.S.
10. Protection Afforded Certain Buyers. The law affords protection to certain buyers and to buyers of certain interest. For example, a buyer in the ordinary course of business may take free of a judgment lien acquired pursuant to Sections 55.201-209, F.S., even though the buyer has knowledge of the lien. Section 55.205(2), F.S. A buyer of stock in a corporation may take free of a judgment lien if the buyer pays value in good faith without notice. Section 55.205(4), F.S. In addition, an individual buyer of goods for personal, family or household use who pays value without knowledge of a judgment lien may be entitled to a lien on the goods superior to a judgment lien in certain cases and subject to specific monetary limitations. Section 55.295(3), F.S.
11. Release of the Lien. Within 30 days following receipt of a written demand by judgment debtor after the obligation underlying a judgment lien has been fully or partially released, the judgment lien holder must deliver to the judgment debtor a written statement indicating that there is no longer a claim for a lien on the personal property of the judgment debtor or that the judgment lien has been partially released and setting forth the value of the lien remaining unpaid as of the date of the statement. A statement signed by an assignee must include or be accompanied by a separate written acknowledgment of assignment signed by or on behalf of the judgment creditor of record. Failure to deliver such statement within 30 days after proper written demand, will result in the judgment lien holder being liable to the judgment debtor for $100 and for any actual or consequential damages, including reasonable attorneys fees, caused by such failure. Such statement may be filed with the Department of State by the judgment debtor, the judgment creditor or assignee. Section 55.206(2), F.S.
12. Amendment or Correction of the Judgment Lien File. The law provides for the amendment or correction of a judgment lien to be filed by or on behalf of the judgment creditor. Section 55.206(1), F.S. In addition, a person may file a correction statement with respect to a judgment lien file if the person believes that the file is inaccurate or that the judgment lien certificate was wrongfully filed. Section 55.207(1)and (2), F.S. However, the filing of such a correction statement does not affect the effectiveness of the judgment lien or other filing. Section 55.207(4), F.S.
13. Effect of Filing Judgment Lien on Writs of Execution Previously Delivered to a Sheriff. Any lien created by writ of execution which has been delivered to the sheriff of any county before October 1, 2001, remains in effective for two years thereafter. Section 55.208(1), F.S. If a judgment creditor who has delivered a writ of execution to a sheriff in any county prior to October 1, 2001, properly files a judgment lien certificate with the Department of State by October 1, 2002, the resulting judgment lien is deemed filed on the date the writ was delivered to the sheriff. Section 55.208(2), F.S. If a judgment creditor who has delivered a writ of execution to a sheriff in any county before October 1, 2001 does not properly file a judgment lien certificate with the Department of State by October 1, 2003, such writ is considered to have been abandoned and to be of no effect after October 1, 2003. Section 55.208.(3), F.S.
14. Title Insurance Considerations. When obtaining title insurance, the insured should be mindful that certain interests which fall under the category of personal property are also insurable as real property interests. Examples of these would be mortgages, leaseholds, mortgages on leaseholds, interests in cooperative associations, a vendees interest under an agreement for deed, and options. Mortgages, however, have been specifically excluded from the personal property interests in which a judgment lien may be acquired pursuant to Sections 55.201-209, F.S. See Section 55.202(2), F.S.
It is important to note that the names of all pertinent prior holders of personal property interests sought to be insured should be searched through the Department of State from October 1, 2001 in addition to searching against the names of the parties in the current transaction. This means that a search for judgment liens filed with the Department of State should be done not only when insuring leaseholds, for example, but also when insuring assignments of leaseholds.
The form of the judgment lien certificate is available on the Department of State’s website at http://ccfcorp.dos.state.fl.us.
This publication is intended to serve you. If you would like certain topics covered, or have any questions or comments, you are invited to contact Mr. Dunham at: 941.951.1800, Ext. 250, Facsimile: 941.366.1603, E-Mail: firstname.lastname@example.org, Web site: www.jrdlaw.com or write him at LUTZ, BOBO, TELFAIR, DUNHAM & GABEL, Two North Tamiami Trail, SARASOTA, FLORIDA 34236.
This publication is designed to provide accurate and authoritative information in regard to the subject matter covered and report on issues and developments in the law. It is not intended as legal advice, and should not be relied upon without consulting an attorney.