Third Party Claims

The EJL includes special procedures for determining the claims of third persons (i.e., those other than the judgment debtor and creditor, or plaintiff and defendant in attachment or claim and delivery proceedings) in property under levy. These third party procedures are optional. They may be used by a third party who claims ownership to or possession of real or personal property, or a superior security interest in or lien on personal property.

The third party claim procedures may be used to assert third party ownership or possession claims to real property levied upon under writ of execution or writ of attachment. [Ca Civ Pro - 720.110(a)] The procedures may also be used to assert third party claims of ownership of or possession to, or of a superior security interest in or lien on, personal property (or fixtures as to which a superior security interest is claimed) levied upon under writ of execution, writ of attachment, prejudgment or postjudgment writ of possession (including claim and delivery proceedings; see Ca Civ Pro - 514.050); or writ of sale. [Ca Civ Pro -- 720.110(b), 720.210] A third party claim may also be filed where the claimant has an equitable right to the property (real or personal) levied upon.

Title or Possessory Claims to Real or Personal Property: A third party claiming legal or equitable title to, or a right of possession to, real or personal property under levy may file a claim with the levying officer. This halts the levy process and forces the levying officer to release the property unless the judgment creditor files an undertaking (bond) or obtains a restraining order.

Claim of Security Interest In or Lien On Personal Property or Fixtures: A third party claiming a superior security interest in or lien on personal property (or security interest in fixtures) must follow substantially the same procedures as for claims of title or possession.

Either the levying creditor or third party claimant may petition the court for a hearing to determine the validity of the third party claim and the proper disposition of the property. [Ca Civ Pro - 720.310] A petition for hearing on the claim must be filed (by the third party or the judgment creditor) within 15 days after the third party claim was filed with the levying officer; or, if the third party filed an undertaking to release the property after the third party claim was filed, within 15 days after the undertaking was filed with the levying officer. [Ca Civ Pro - 720.310(a)] The judgment creditor may have as little as 10 days to file the petition because the levying officer has five days in which to notify the creditor that the third party claim and/or undertaking was filed. If the petition is not timely filed, the court that entered the judgment loses jurisdiction to entertain the summary proceedings. [Commercial Credit Plan, Inc. v. Gomez (1969) 276 Cal.App.2d Supp. 831, 834, 80 Cal.Rptr. 534, 536 (decided under similar provisions of former law)]

The hearing must be held within 20 days after the petition is filed, unless the matter is continued by the court for good cause. [Ca Civ Pro - 720.310(c)]

Pending the hearing, the property levied upon may be sold, delivered or released by the levying officer if proper undertakings have been filed by the creditor and/or third party (or a deposit made by the creditor) (Ca Civ Pro -- 720.260, 720.270). To prevent this, the court may order the sale stayed or enjoin any transfer or other disposition of the property until the hearing is concluded. [Ca Civ Pro - 720.380(a)]

Although the proceeding is summary by nature, the parties are entitled to a trial with all due process protections. [See Cassel v. Kolb (1999) 72 Cal.App.4th 568, 579-580, 84 Cal.Rptr.2d 878, 885] But the hearing is decided by the court; there is no right to a jury. [Ca Civ Pro - 720.410]

The third party claimant has the burden of proof. [Ca Civ Pro - 720.360] However, if the creditor contends the property was fraudulently transferred to the third party claimant and the third party claimant introduces evidence showing he or she owns the property, the burden shifts back to the creditor to prove the property was fraudulently transferred.

At conclusion of the hearing, the court must render judgment determining the validity of the third party claim, and may order disposition of the property or its proceeds. The judgment is conclusive as to the parties to the proceedings (i.e., third party claimant, levying creditor and judgment debtor). The judgment may be appealed. [Ca Civ Pro -- 720.390, 720.420]