Lawsuits, liens, and other encumbrances.

Plain English Breakdown

Checked against official source text during the last sync.

Rules for Lawsuits, Liens, and Other Claims

This law increases penalties for filing false lawsuits or liens, requires notification to debtors when financing statements are filed, and increases notice requirements before selling aircraft with liens.

What This Bill Does

• Increases the penalty from $5,000 to $15,000 for anyone who files a lawsuit, lien, or other claim that they know is false.
• Requires the Secretary of State to notify debtors within 21 days after a financing statement is filed against them.
• Makes parties who violate rules about lawsuits, liens, or claims pay three times any court fees incurred by the debtor at the end of legal proceedings.
• Increases the number of public places where notices must be posted from three to five if there's no local newspaper when selling aircraft with liens.

Who It Names or Affects

• People who file lawsuits, liens, or other claims
• Debtors whose financing statements are filed
• Lienholders who sell aircraft

Terms To Know

lien

A legal claim against property to secure payment of a debt.

financing statement

A document filed with the Secretary of State that shows a security interest in personal property or fixtures.

Limits and Unknowns

• The bill does not specify how the increased penalties will be enforced.
• It is unclear if there are any exceptions to the new notice requirements for selling aircraft with liens.

Official Summary Text

AB 501, as amended, Papan.
Liens on aircraft: sale.
Lawsuits, liens, and other encumbrances.
Existing law prohibits a person from filing or recording, or directing another to file or record, a lawsuit, lien, or other encumbrance against any person or entity, knowing that it is false, with the intent to harass the person or entity or to influence or hinder the person in discharging their official duties if the person is a public officer or employee. Existing law also provides that a person who files a lawsuit, lien, or other encumbrance against any person or entity in violation of this prohibition is liable for a civil penalty not to exceed $5,000.
This bill would instead provide that a person who files a lawsuit, lien, or other encumbrance against a person or entity in violation of the above-described prohibition is liable for a civil penalty not to
exceed $15,000.
The Uniform Commercial Code-Secured Transactions governs security interests in collateral, including personal property and fixtures, as well as certain sales of accounts, contract rights, and chattel paper. That code, among other things, specifies requirements and procedures regarding perfecting a security interest, including the filing of a financing statement with the Secretary of State. Existing law specifies that a financing statement is sufficient if it provides, among other things, the name of the debtor. If it is established that a secured party is not proceeding in accordance with the code, existing law authorizes a court to restrain collection, enforcement, or disposition of collateral on appropriate terms and conditions.
This bill would require the Secretary of State to notify the debtor named in the financing statement within 21 days after the financing statement is filed. The bill would
additionally require any court fees incurred by a debtor to be paid at the end of the judicial proceeding, as specified. The bill would also make any party deemed to have violated above-described provision regarding lawsuits, liens, or other encumbrances liable to the debtor for three times all of the court fees paid.
Under existing law a person has a lien, dependent upon possession, for the amount the person is owed for any services, materials, or storage provided for any aircraft, unless specified exceptions apply. If the lienholder is not paid the amount due within 10 days of its due date, the lienholder may sell the property at public auction. Prior to selling the property, the lienholder must publish a notice of sale in a newspaper published in the county or, if there is no such newspaper, in three of the most public places in the city or place where airplanes are sold, as specified.
This bill would increase the notice requirement to require the lienholder, where there is no newspaper in the county, to publish a notice of sale in five of the most public places in the city or place where airplanes are sold and, if known, at the airport at which the
aircraft is located.

Current Bill Text

Download Bill PDF