California money judgments are generally controlled by the Enforcement of Judgments Law (Code of Civil Procedure 680.010, et seq.).
Lifespan
Under the law, California judgments have an initial life span of ten (10) calendar years from the date of entry. During this time, the judgment will accrue simple interest at the legal rate of 10.0% per annum and the judgment creditor can commence post-judgment collection and enforcement activities (discussed below). This state of affairs continues until: (a) all interest, costs and the entire principal portion of the judgment has been paid in full (i.e., full satisfaction); (b) a negotiated settlement or compromise is achieved where the parties agree that no additional sum remains due and owing on the judgment; or (c) the judgment enforcement period expires (e.g., after 10 years from date of entry without having been timely renewed).
Once the judgment enforcement period expires without prior timely renewal, it is no longer enforceable; not even if the judgment creditor (i.e., the winning party) never collected a dime on it and notwithstanding the fact that the judgment debtor (i.e., the losing party) might happen to now have millions of dollars in liquid assets available for paying the balance off or down.
Renewal
Judgments may be renewed for an additional 10 year period, but not during the first 5 years after issuance. A judgment entered Jan. 1, 2019, for instance, may not be renewed prior to Jan. 1, 2024. Once properly renewed, the life span of the judgment will increase by an additional 10 years from the date of such timely and appropriate renewal.
The judgment renewal process is a ministerial task handled by the Clerk of the Court upon the judgment creditor's filing of a properly prepare application for renewal of judgment and payment of $30 filing fee. (See Judicial Council Form EJ-190.) The filing fee for the application is also rolled into the balance owed on the judgment at the time of renewal under Code of Civil Procedure Section 683.150(c).
Once the Clerk of the Court renews the judgment, it will have a new effective life of 10 years from the date of such renewal. The renewal process is not completed, however, until such time as the judgment creditor serves the judgment debtor(s), either in person or by mail, with a copy of a Notice of Renewal of Judgment signed by the Clerk and then also files a copy of the proof of service evidencing same with the Court. (See Judicial Council Form EJ-195 and Code of Civil Procedure Section 683.160.) At the same time as serving the notice, the judgment creditor shall attach and include a copy of the signed application for renewal filed with the Court.
After service of the Notice of Renewal of Judgment (and the enclosed copy of the application itself), the judgment debtor has 30 days to file and serve a motion to vacate the renewal of judgment (for whatever reasons might apply; e.g., full satisfaction previously achieved). If a timely noticed motion to vacate is not filed, however, the judgment is fully and finally deemed renewed in the amount set forth in the application for renewal.
Renewing an Expiring Abstract of Judgment Lien on Real Property
Also, any real property judgment liens (i.e., abstracts of judgment) will expire concurrently with the expiration of the original judgment. This may result in an unintentional and potentially devastating loss of lien priority to the detriment of the judgment creditor. To avoid such an outcome, the judgment creditor must cause a court certified copy of the filed application for renewal of judgment to be filed recorded in the official records of the county where the earlier abstract of judgment had previously been recorded (i.e., the county where the subject real property collateral securing the judgment is situated).
Simple v. Compounding Interest
Generally speaking, the interest accruing on the judgment shall not be compounded. Instead it is treated as simple interest. However, at the time of renewal of a judgment, all accrued and unpaid interest and costs shall, at that time only, be added to the "principal amount" of the judgment.
For illustrative purposes, if a $1 MM judgment remains wholly unsatisfied after nearly 10 years, that judgment will have accrued $1 MM in additional interest during that period. If that judgment is timely and properly renewed prior to the expiration of the 10 year deadline, a renewed judgment could be entered for roughly $2,000,030 (i.e., $1 MM in the original unpaid principal + $1 MM in accrued, unpaid post-judgment interest + $30 renewal fee). From that point forward (i.e., after the renewed judgment has been entered), the judgment will accrue interest at 10.0% per annum on $2,000,030 (approximately at the rate of $200,000 per year instead of the previously applicable $100,000 per year rate).