'Court Ordered Liens for Fees'
How to use Probate Code Section 674
In my business of arranging loans to trusts and estates, I also purchase court ordered liens for attorney fees. In the past, I did not record Abstracts of Judgment (Order for Final Distribution and Attorney Fee); and, in some cases, a refinance or sale escrow missed both the recorded Order and Assignment of Lien; so I didn't get paid.
I offer the following suggestions to assist the Trust and Estate practitioners who attempt to secure their attorney fees:
Merely recording a certified copy of the Order for Attorney Fees is insufficient to create a lien on the subject real property. A lien is created by the action of recording an Abstract of Judgment, pursuant Civil Procedure Code Section 674
Section 674 has been amended numerous times, since it was enacted in 1872, and
provides for the creation of a lien on real property owned by an estate, a ward or conservatee, or a trustee. Simply recording the Probate Court Order for Fees is insufficient to create the lien. The action of recording an Abstract of Judgment is the method of lien creation.
The Abstract of Judgment must be issued by the court and recorded in the County where the subject real property is located. The purpose of an Abstract of Judgment is to create a public record and create a lien.
Many Superior Court Abstract Clerks have never issued an Abstract of Judgment for a Probate Court Order and are resistant/reluctant to do so. Some of the creative ways I have used to have the Abstract issued, include:
- In the petition for fees, pray the court to order the Abstract Clerk to issue an Abstract of Judgment
- If you do not have an order requiring the Abstract Clerk to issue an Abstract of Judgment, an attorney service with familiarity with the court clerks may be your best bet for the Abstract issuance
A FEW NOTES ON PRIORITY:
- Do not let escrow, title, or any other entity (or person) record the Order for Fees (usually an Order for Final Distribution), as another lien or mortgage may sneak in at a higher priority
- Since, Section 674 states: "A recorded Amendment to Abstract of Judgment shall have priority as of the date of recordation of the original abstract of judgment . . ."; I recommend that the practitioner record the certified copy of the Order for Fees concurrently with the Abstract of Judgment to reserve the attorney fee priority (be sure the Order is recorded first, then the Abstract)