## Facts

- The Kahns obtained a Nevada money judgment (including punitive damages for fraud) against William and Nana Berman arising from a dispute over the purchase of a Las Vegas truck-rental business.
- The day after entry of the Nevada judgment, the Kahns recorded the Nevada judgment in San Mateo County, California, where the Bermans owned a residence.
- Days later, a $500,000 deed of trust in favor of “The Berman Corporation” was recorded against the same residence; it appeared backdated, and its acknowledgment was dated one day after the Nevada judgment.
- The Kahns applied for entry of a California sister-state judgment based on the Nevada judgment; the clerk entered the California judgment in March 1985, and a corrected notice of entry was later served.
- In March 1986, the Kahns obtained a writ of execution and the sheriff levied on the Hillsborough residence; the Kahns then sought an order authorizing sale under Code of Civil Procedure section 704.780.
- In April 1986, the Bermans recorded a declared homestead on the residence; in May 1986, the Kahns recorded an abstract of the California judgment.
- The trial court ruled the March 1986 levy created an execution lien with priority over the April 1986 homestead, denied a homestead exemption, set fair market value at $450,000, and ordered sale.
- The Bermans appealed the order of sale; the Kahns cross-appealed.

## Issues

1. Whether recordation in California of a sister-state money judgment, without first obtaining a California judgment, creates a California judgment lien on California real property.
2. Whether lien priority and the availability of a homestead exemption should be determined based on valid California lien-creation steps rather than the earlier recordation of the sister-state judgment.
3. Whether the trial court correctly applied the enforcement, lien, and homestead statutes in authorizing sale of the residence.

## Decision

- The Court of Appeal reversed the order authorizing sale of the Bermans’ residence.
- Recordation of the Nevada judgment in California did not, by itself, create a California judgment lien on the residence.
- Because no lien arose from the Nevada recordation, priority had to be analyzed under California procedures tied to the California judgment (including levy under a writ of execution and/or recordation of an abstract of the California judgment) in relation to the declared homestead and other encumbrances.
- The trial court’s order of sale rested on an erroneous view of when and how a lien arose and therefore required reversal and remand for further proceedings under the correct statutory scheme.

## Legal Principles

- A sister-state money judgment must be reduced to a California judgment before it can support creation of a California judgment lien on California real property.
- Recording a sister-state judgment in a California county recorder’s office, standing alone, does not create a judgment lien under California’s judgment lien statutes.
- Lien creation and priority against California real property are governed by California enforcement procedures tied to the California judgment (including levy under a writ of execution and/or recording an abstract of the California judgment), and those steps control analysis against a subsequently recorded declared homestead.
- An order for sale of a dwelling under Code of Civil Procedure section 704.780 must be based on properly established California lien rights and priority rules.

## Conclusion

The court reversed an order permitting sale of a judgment debtor’s residence because the creditor’s recording of a sister-state money judgment did not create a California real property lien; lien existence and priority had to be determined only after entry of a California judgment and compliance with California lien-creation procedures, requiring reconsideration of homestead and priority issues on remand.


Kahn v. Berman, 198 Cal. App. 3d 1499, 244 Cal. Rptr. 575 (Ct. App. 1988)