A partition action does not freeze a creditor’s lien in place. In Starcevic v. Pentech Financial Services, Inc. (2021) 66 Cal.App.5th 365, the Court of Appeal held that a creditor ranked first in line for one co-owner’s share of the sale money lost its place, and every dollar, because it let its judgment expire while the properties were being sold. The partition statutes did not excuse it from following the law that kept its lien alive, so the next creditor in line was paid instead.
Why Starcevic v. Pentech Matters
When one co-owner has unpaid judgments against them, their creditors’ liens attach to that co-owner’s share. Those creditors are brought into the partition, the court ranks their liens, and they are paid from that co-owner’s share of the sale money. The question in Starcevic was whether a creditor could rely on that ranking and stop worrying about the rules that normally keep a judgment lien alive.
The answer was no, and the reason is Code of Civil Procedure section 872.040, which says a partition does not excuse compliance with any other law governing the division, sale, or transfer of property. Starcevic is the leading case reading that section broadly. For co-owners, it means a partition is not a shortcut around other property laws. For creditors, it means a lien must still be valid on the day the money is paid out.
In 2013, the co-owners of four parcels in San Diego County filed a partition action. One co-owner, Lucille Tran, owned 20 percent, and several of her creditors were named as defendants.
Pentech Financial Services got a $1,321,653.58 judgment against Tran in March 2008 and recorded it in April 2008. Edward Roski, as trustee of a family trust, got a $1,200,000 judgment against her in May 2009 and recorded it in August 2009. Because Pentech recorded first, Pentech was first in line.
In California, a money judgment can be enforced for 10 years, and the creditor can renew it for another 10 years by applying before the first period ends. A judgment lien on real property lasts only as long as the judgment. (Starcevic, at p. 375.) Roski renewed. Pentech did not, and its judgment expired in March 2018.
Meanwhile, the partition moved slowly. In 2015, the court ranked the creditors by recording date and named Pentech first. In 2017, the parties agreed to an interlocutory judgment of partition that ranked the liens the same way and held Tran’s share of the sale money in escrow until the court ordered it paid. Only one parcel had sold when Pentech’s judgment expired. When all four had sold, Tran’s share came to $505,957.45, and the trial court gave it to Roski.
How the Court of Appeal Reached Its Decision
A Final Ranking Could Not Save an Expired Lien
Pentech argued that the ranking was final, so it never needed to renew. An interlocutory judgment of partition is conclusive on the matters it decides, even though it comes before the final judgment. (Starcevic, at pp. 375–376.) The court assumed the ranking was part of that judgment and was final. Pentech still lost, because the trial court had not changed the ranking. As the court put it, the trial court “did not revisit the priority lien determination so much as recognize that, by operation of law, Pentech’s judgment lien had expired and was thus no longer valid.” (Starcevic, supra, 66 Cal.App.5th 365.)
Section 872.040 Keeps Other Property Laws in Force
Section 872.040 provides that “[n]othing in this title excuses compliance with any applicable laws, regulations, or ordinances governing the division, sale, or transfer of property.” The court called “nothing” and “any” sweeping words. The law on enforcing judgments is one of those laws, because it controls how long a judgment lien lasts and how property is sold to pay it. The court also read section 872.040 together with section 872.030: the partition statutes carve out special rules for court procedure, but no similar exception for property laws. (Starcevic, at pp. 378–379.)
Since 1982, the 10-year period has not been extended or paused because collection was delayed, and a slow partition was no excuse. As the court explained, “The extinguishment was an effect of Pentech’s failure to renew the judgment, not a result of a court order.” (Starcevic, supra, 66 Cal.App.5th 365.)
Pentech also asked for part of the money from the one parcel that sold before its judgment expired. The court said no. The parties had agreed that Tran’s share would stay in escrow until the court ordered it paid, and under Code of Civil Procedure section 873.600 the court must follow sale terms the parties agree to in writing. “Having stipulated to a delayed disbursement of these proceeds, Pentech was awaiting collection when its judgment expired.” (Starcevic, supra, 66 Cal.App.5th 365.) An expired judgment cannot be used to collect anything.
The Result: The Next Creditor in Line Was Paid
The Court of Appeal affirmed the judgment giving Roski all $505,957.45 of Tran’s share. Pentech, which had recorded first, received nothing.
What Starcevic v. Pentech Means for California Co-Owners
- A partition is not a way around other property laws. Section 872.040 keeps them all in force.
- A lien’s place in line is only as good as the lien. The court decides lien priority under section 872.630 and pays out under section 873.820, but an expired lien gets nothing.
- If your co-owner has creditors, check whether their judgments are still valid. A lien that lapsed during the case no longer takes part of the sale money. See our guide to judgment liens on co-owned property.
- Partitions with several properties can take years. Creditors should renew on time, even while the case is pending.
Liens Against Your Co-Owner? Start Your California Partition Action
A co-owner’s creditors do not have to stand between you and a sale. Their liens attach only to that co-owner’s share, and a partition brings them into one case so the property can be sold and each owner paid what belongs to them. Learn how to calculate your share in a partition, then file a partition lawsuit.
Talkov Law can help. With 12 full-time partition attorneys and experience in over 650 partition actions throughout California, our team handles every step of the process, from naming every lienholder in the complaint through the partition referee‘s sale and the final distribution of proceeds. Call (877) PARTITION (727-8484) today or contact us online to get started.
