I. EXPIRATION OF ARIZONA JUDGMENTS.
In Arizona, a judgment is initially effective for five (5) years from the date of its entry by the Clerk of the Court. Arizona’s legislature has determined that the Judgment Debtor will be released from further obligation unless a Judgment Creditor timely files a renewal affidavit or otherwise brings an action on the judgment within five years after its entry. Inherent in this statute of limitations is the risk that a party who owes money may escape liability if the creditor does not act in a timely fashion. Fidelity Nat. Financial Inc. v. Friedman, 225 Ariz. 307 (2010). The affidavit of renewal serves to notify interested parties of the existence and continued viability of the Judgment. J.C. Penney v. Lane, 197 Ariz. 113 (CA1, 1999).
Entry of the Judgment by the Clerk is not always the same date as when the Judgment was signed by the Judge or Commissioner. Execution or collection proceedings must be accomplished within that 5 year period. A.R.S. § 12-1551(B). The five-year period does not begin to run until the judgment can be enforced or sued upon, i.e., following a stay pending an appeal. Groves v. Sorce, 161 Ariz. 619, (CA2, 1989); Northstar Development Corp v. Wolfswinkel, 146 Ariz. 406, (CA2, 1985), or upon default of payment arrangements. Willers v. Willers, WL 1507190 (NR), (CA1, 2010) Further, A.R.S. § 12-1551(B) provides that execution or other process may not be issued upon a judgment after the expiration of five (5) years from the date of its entry unless the judgment has been timely renewed.
Practice Pointer
Upon notification of entry of the Judgment by the Clerk of the Court, the best practice is to obtain one or more Certified copies (typically for a fee of around $30) and then immediately cause the same to be recorded in every county in which the Judgment Debtor has (or may in the future) acquire real property. The recorded copy requires a Judgment Information sheet as the cover page, and should include a calculation worksheet detailing the amounts due under the Judgment and accruing interest.
A copy of the Recorded Judgment should be mailed to the Judgment Creditor at the last known address or the address for service of process (in the event of default judgments) to avoid collateral attacks on the Judgment later on. Note that effective 21-Jul-2011, the interest rate attributable to judgments entered after that date is tied to the prime lending rate. A sample Judgment Information Sheet and Judgment Calculation Worksheet is attached.
II. RENEWAL OF ARIZONA JUDGMENTS.
A. Renewal of Judgments on Real Property.
Judgment liens doe not exist at common law and exist only by statutes. Tway v. Payne, 55 Airz 343 (1940). Under A.R.S. §33-964, a judgment becomes a lien “upon all real property of the Judgment Debtor” after it has been recorded as provided by §33-961. Bryan v. Nelson, 180 Ariz. 366 (CA1, 1994). A Judgment Creditor who desires that a judgment become a lien on real property of the Judgment Debtor can accomplish this by recording a certified copy of the judgment in the office of the county recorder in each county in which the Judgment Debtor has, or might have, real property. A.R.S. § 33-961(A). The certified copy of the judgment tendered for recording must contain the following information:
1. Title of the Court in which it was entered and the civil action number;
2. Date the judgment was entered and the docket record thereof;
3. Name of both the Judgment Creditor and the Judgment Debtor;
4. Amount of the judgment; and,
5. Attorney of Record for the Judgment Creditor.
Under A.R.S. §§ 33-963 and 33-964(A), a judgment that is recorded in this manner becomes a lien on the real property of the Judgment Debtor for a period of five (5) years from the date the judgment was entered by the Clerk of the Court. As discussed in the above section, a judgment may be renewed either by filing a suit on it or by filing an affidavit of renewal with the Clerk of the appropriate Court. A.R.S. §§ 12-1611, 1612(A). Merely re-recording the original judgment with the county recorder every 5 years is not sufficient to extend the judgment lien. An affidavit of renewal must be timely filed with the Clerk of the Court in which the original judgment was obtained.
Renewal, however, does not automatically extend the judgment lien created by the recording of the original judgment. Hall v. World Savings and Loan Association, 189 Ariz. 495, (CA1, 1997). In order to extend that judgment lien, the Judgment Creditor must also record in the county recorder’s office an affidavit of renewal of the original judgment. No lien will attach to real property until the original judgment has been renewed with the Clerk, AND, the Affidavit of Renewal has been recorded with the County Recorder. Id. A.R.S. Section 12-1613(C).
Practice Pointer
The Judgment must be timely renewed with 5 years from the date of the original entry by the Clerk of the Court – NOT – 5 years from the date of recording (unless these are the same date). For calendaring purposes, it is important to note the date of entry of judgment and calendar a tickler 90 days prior to the 5 year limitation (and preferably at 60 and 30 days prior as well).
Upon renewal, and in order to comply with the intent of the statues (to notify interested parties of the existence and continued viability of the Judgment), a copy of the Affidavit of Renewal should be mailed to the Judgment Creditor and its former counsel, at all known addresses.
Prior to renewing the Judgment and recording the Affidavit of Renewal, it is good practice to check with the County recorder’s office to determine if the Judgment Debtor has acquired any real property during the 5 year period from the original judgment recording and the renewal. If property is located, mail a copy of the Affidavit of Renewal to the Judgment Debtor at the new address. The Affidavit of Renewal recorded with the County Recorder should also make reference to the original recording information and include an updated Judgment Calculation Worksheet reflecting any payments received or a computation of the interest accrual.
B. Renewal of Monetary Judgments.
Monetary judgments also expire if not renewed every five (5) years. Crye v. Edwards, 178 Ariz. 327, 873 P.2d 665 (Div. 1 1993). According to A.R.S. § 12-1611, a judgment may be renewed by instituting an action on it. Further, a judgment may also be renewed for an additional five years by filing an affidavit for renewal which complies with the requirements of A.R.S § 12-1612. An affidavit of renewal of a judgment, if required, must be filed within ninety (90) days before, and not after, expiration of the judgment or a prior renewal. Mobile Discount Corporation v. Hargus, 156 Ariz. 559, 753 P.2d 1215 (Div. 2 1988). [emphasis added]. In accordance with A.R.S. § 12-1612, the affidavit of renewal, which may be made by the Judgment Creditor or a personal representative or assignee of the Judgment Creditor, must set forth the following:
1. The names of the parties to the action in which the judgment was rendered;
2. The name of the court in which the judgment was docketed and the number and page of the docket in which it was entered;
3. If the judgment has been recorded, the name of the county in which it has been so recorded and the number and page of the book in which it was recorded;
4. The name of the owner of the judgment and, if the owner is not the judgment creditor, the source and succession of the owner’s title;
5. Whether or not any execution upon the judgment is outstanding and unreturned;
6. The date and amount of all payments upon the judgment, and a statement that such payments have been credited;
7. Whether or not there any set-offs or counterclaims in favor of the judgment debtor and, if so, the amount thereof; and
8. The exact amount currently due upon the judgment after allowances for set-offs and counterclaims.
Id. The renewal of judgment statutes clearly prescribe that the affidavit is to be filed with the clerk of the superior court in the same County in which the judgment was docketed so that it can be maintained with the other records concerning that judgment. Id. [emphasis added]
Practice Pointer
Prior to renewing the Judgment and recording the Affidavit of Renewal, it is good practice to check with the County recorder’s office to determine if the Judgment Debtor has acquired any real property during the 5 year period from the original judgment recording and the renewal. If property is located, mail a copy of the Affidavit of Renewal to the Judgment Debtor at the new address. The Affidavit of Renewal recorded with the County Recorder should also make reference to the original recording information and include an updated Judgment Calculation Worksheet reflecting any payments received or a computation of the interest accrual.
As a practical matter, monetary Judgments can be located in the Judgment Docket for the county in which the original judgment was entered. In order to provide as much notice to potential third parties, one way to provide Statewide notice is to also file a UCC-1 together with a copy of the Judgment with the Arizona Secretary of State.
C. Additional Procedural Requirements for Renewal of Judgments.
In order to properly record the judgment with the county recorder, the Judgment Creditor must attach the to Affidavit of Renewal a separate Judgment Information Statement which is to contain the following additional information on the first page: (1) the correct name and last known address of each Judgment Debtor; (2) the name and address of the Judgment Creditor; (3) the amount of the judgment; (4) the social security number, date of birth and driver’s license number of any Judgment Debtor who is a natural person; and, (5) whether enforcement of the judgment has been stayed and, if so, the date the stay expires. A.R.S. § 33-967.
Practice Pointer
At the time of filing the Affidavit of Renewal with the Clerk of the Court, make two copies. One for filing and a second for conformance (date stamp filing confirmation) by the Clerk. To this copy, attach the Judgment Information Statement and the renewed Judgment Calculation Worksheet. The Affidavit of Renewal and Judgment Information Statement should also make reference to the original recording information for ease of cross-referencing by the County Recorder’s office.
Since the Judgment Information Statement should include the name, address, and social security number, date of birth and driver’s license number (if a natual person), it is important for the Judgment Creditor to try and obtain this information at the time of the original transaction. Fields for this information should be included on the original credit application with the Judgment Debtor whenever possible.
D. Bankruptcy and Renewal of Judgments.
During the period of 2007 through 2010, Arizona has experienced a significant number of bankruptcy filings for both individuals and businesses – over 106,000 (~2,000/mo). 2011 is expected to be the worse ever with over 3,000 new filings each month. As such, prior to taking steps to renew any judgment, it is important to check with the US Courts official website to determine if the Judgment Debtor has filed for bankruptcy protection and the automatic stay provisions of 11 USC §361 are in effect.
The fact that the Judgment Debtor has filed for bankruptcy protection DOES NOT excuse the Judgment Creditor from timely filing an Affidavit of Renewal. The automatic stay effects only the Judgment Creditor’s ability to enforce a judgment. It does not excuse the need to timely renew the judgment during the pendency of the bankruptcy proceedings which is considered a simple ministerial act of preserving the Judgment Creditor’s potential rights and is not prohibited under Arizona law by an automatic bankruptcy stay or any stay of the enforcement of the judgment, such as might be imposed by the filing of a supersedeas bond. In re Smith 209 Ariz. 343 (Ariz. 2004).
It has been the practice in the Arizona Bankruptcy Court that judgments are initially docketed in the Bankruptcy Court. If the Judgment Creditor wishes to execute on the judgment, Judgment Creditor follows the procedures under Arizona State law. If the Judgment Creditor wishes to proceed in another Federal District or State, the Judgment Creditor requests a certified copy of the Bankruptcy Court Judgment, which is then filed in the Arizona Federal District Court. The Judgment Creditor then proceeds to domesticate the judgment in the other District or State, and executes on the judgment pursuant to the law of that District or State. As to renewal affidavits of Arizona Bankruptcy Court judgments, the party follows the procedure that is outlined in the Arizona statutes that refers to the “district court.” In re Davis, 323 R.R. 745 (Bktcy.D.Ariz, 2005)
III. FEDERAL DISTRICT COURT JUDGMENTS.
The process for registering a judgment of one federal district court in another federal district court is outlined in 28 USC §1963. The federal court applies state law, however when renewing a judgment that has already been registered in that state. Fidelity Nat. Financial Inc. v. Friedman, 602 F.3d 1121 (CA9, Ariz 2010). Thus, the process to be followed for a federal court judgment in Arizona is the same as that required for a state court judgment – timely filing an Affidavit of Renewal within 5 years of the date of entry of the original judgment – with the Clerk of the District Court. See generally A.R.S. §1-215 which provides for the applicability of Arizona state laws to any matter or proceeding in any court, civil or criminal.