In California, is it true that a judgment creditor has only four years to demand payment, or then must move for an order of sale, after a deed transfer to a bona-fide purchaser for value?

One of many judgment-related articles: I am not a lawyer, and this article is my opinion based on my experience in California, please consult with a lawyer if you need legal advice.

More on our hypothetical example; An abstract of judgment was recorded, followed by a deed with the judgment debtor as grantor, with no intervening release, and no acknowledgment of satisfaction in the court’s register of actions; no bankruptcy(s); no foreclosures; and the ten-year renewal period limit had not yet passed, however more than four years have passed since the deed was recorded.

The general rule is that whoever bought the property, has only four years from the time they discovered or should have discovered a defect in the title, to file a claim against the title insurance company.

The new property owner usually will not have known about the defect in the property title. They will have relied on a title searcher’s report, and the title searcher does not work for them.

It may not matter whether the current owner is covered by property title insurance. It might be faster and easier to get paid if they are covered. However the debtor will have to come up with the money somehow (with their HELOC?), or face an order of sale, under this scenario.

Typically, there is a four-year statute of limitations on fraudulent transfers. However, this article does not cover fraudulent transfers. We are talking about a legitimate transfer, where the lien remains in place against the transferred property.

I have never heard of any time limits, other than the 10-year lifespan of a California judgment, for a judgment enforcer to take an action to enforce the judgment. And, judgments can be renewed.

If a lack of prior enforcement efforts were a defense to new enforcement actions, it seems that judgment enforcers would be out of business, because so many take assignment of judgments several years after the last enforcement-related action was taken by the original judgment creditor.

Even if there is a defense that could be applied against the original judgment creditor, it could be applied to judgment enforcers too. The fact that they “just showed up” is irrelevant, because they step into the shoes of the original judgment creditor, and the judgment debtor has available to all the defenses against enforcers, that they would have had against the original judgment creditor.

The California, the ten-year limit can almost always be counted on, even if some sort of alter-ego statute of limitation situation may be involved.

According to the Matthew Bender Practice Guide, California Debt Collection and Enforcement of Judgments, Chapter 9, sections 9:40-9:40[3], you can bring a motion to amend the judgment to add a new alter-ego party, even after the original statute of limitations has run. However, the judge may refuse if the judgment creditor has not acted with due diligence soon enough after learning of the alter-ego relationship.

As per Matthew Bender’s guide book, one needs to show several specific facts that the non-party was an alter-ego; the alter-ego actually was involved with the original litigation; and the non-party had occasion to conduct it with a diligence corresponding to the risk of personal liability involved). In order to prove those issues, you might need to conduct some extensive discovery.

The Matthew Bender practice guide has several sample forms that may be useful in drafting a motion and/or doing post-judgment discovery. Generally, an amendment to add a new alter-ego debtor must be made in a timely manner.

In Alexander vs Abbey of the Chimes (1980) 104CA 3rd 39, 47-48, the appellate court denied the motion to amend, because it was made after 7 years and without due diligence. The respondents waited nearly 7 years after the judgment was final, to seek to include an unnamed defendant, an alleged alter-ego of the corporation against which they had received their judgment.

Unlike the situation with the case of Thompson vs L.C. Roney & Co; Supra, where the alter-ego situation was not discovered until two years after litigation, the respondents knew, or should have known that the appellant was the alter-ego of Abbey, either at the time of the original proceeding, or shortly thereafter.

In Alexander vs Abbey and the Chimes case, they said: “Accordingly, we find that in the absence of any reasonable explanation for nearly a seven-year delay in moving for amendment, the trial court abused its discretion granting this belated motion for amendment of the judgment”.

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