CaliforniaLawsuits, liens, and other encumbrances.
What it does
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.
More detail
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 bill would also define "lien," for purposes of the above-described prohibition, to include a financing statement. The bill would prohibit a person from filing, or directing another to file, a financing statement for which no reasonable basis or legal cause exists. The bill would make related, conforming changes to these provisions.
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 or the county recorder, based on the property type. 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.
This bill would authorize a person identified as a debtor in a financing statement or a person who reasonably appears to be the person intended to be identified as a debtor in a financing statement that was not permitted to be filed, as prescribed, to file an affidavit, under penalty of perjury, attesting as such with the filing office in which the statement was filed. The bill would require the Secretary of State to make available a form affidavit for use. The bill would require the filing office, following acceptance of a properly signed affidavit, to hold the affidavit in abeyance for a 30-day period. The bill would require the filing office, upon expiration of that 30-day period, if no court order enjoining the filing has been received, to file a termination statement with respect to the financing statement identified in the affidavit, in accordance with certain legal procedures and timelines.
The bill would authorize a secured party of record, identified in a financing statement for which an affidavit has been accepted, to petition the court to enjoin the filing office from filing the termination statement and for the court to determine whether the financing statement is valid and should be reinstated, as specified. The bill would authorize a court to award costs, reasonable attorney's fees, and, upon determining an affidavit was filed in bad faith, a $5,000 civil penalty. By expanding the crime of perjury and imposing new duties on county recorders, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that with regard to certain mandates no reimbursement is required by this act for a specified reason.
With regard to any other mandates, this bill would provide that, if the Commission on State Mandates determines that the bill contains costs so mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.
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Where it stands
- Introduced
- Passed Assembly
- Passed Senate
- To Governor
- Became Law
Looking ahead
No hearings or votes scheduled.
History
- 2026
- Sep 27Chaptered by Secretary of State - Chapter 505, Statutes of 2026.Latest
- Sep 27Approved by the Governor Gavin Newsom.Became Law
- Aug 28Enrolled and presented to the Governor at 3:30 p.m.To Governor
- Aug 24Senate amendments concurred in. To Engrossing and Enrolling. (Ayes 78. Noes 0. Page 6423.).Major
- Vote recorded AB 501 Papan Concurrence in Senate Amendments. Result: pass.Lower
- Aug 20In Assembly. Concurrence in Senate amendments pending.
- Vote recorded Special Consent AB501 Papan By Umberg. Result: pass.Upper
- Aug 20Read third time. Passed. Ordered to the Assembly. (Ayes 39. Noes 0. Page 5587.).Passed Senate
- Aug 18Ordered to special consent calendar.
- Aug 13Read second time. Ordered to third reading.Minor
- Vote recorded Do pass. Result: pass.Upper
- Aug 13From committee: Do pass. (Ayes 7. Noes 0.) (August 13).Minor
- Aug 3In committee: Referred to APPR. suspense file.Minor
- Vote recorded Placed on suspense file. Result: pass.Upper
- Jul 1From committee: Do pass and re-refer to Com. on APPR. with recommendation: To Consent Calendar. (Ayes 6. Noes 0.) (June 30). Re-referred to Com. on APPR.Minor
- Jun 30
- Vote recorded Do pass, but first be re-referred to the Committee on [Appropriations] with the recommendation: To Consent Calendar. Result: pass.Upper
- Jun 15Re-referred to Com. on PUB. S.Minor
- Jun 10From committee: Do pass and re-refer to Com. on RLS. with recommendation: To Consent Calendar. (Ayes 12. Noes 0.) (June 9). Re-referred to Com. on RLS.Minor
- Jun 9
- Vote recorded Do pass, but first be re-referred to the Committee on [Rules] with the recommendation: To Consent Calendar. Result: pass.Upper
- Jun 1From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on JUD.Major
- May 6Referred to Com. on JUD.Minor
- Jan 29In Senate. Read first time. To Com. on RLS. for assignment.Minor
- Vote recorded AB 501 Papan Assembly Third Reading. Result: pass.Lower
- Jan 29Read third time. Passed. Ordered to the Senate. (Ayes 75. Noes 0. Page 3872.)Passed Assembly
- Jan 22Read second time. Ordered to third reading.Minor
- Vote recorded Do pass. Result: pass.Lower
- Jan 22From committee: Do pass. (Ayes 15. Noes 0.) (January 22).Minor
- Jan 22In committee: Set, first hearing. Referred to suspense file.Minor
- Jan 22Assembly Rule 63 suspended. (Page 3806.)
- Jan 15From committee: Do pass and re-refer to Com. on APPR. with recommendation: To Consent Calendar. (Ayes 12. Noes 0.) (January 15). Re-referred to Com. on APPR.Minor
- Vote recorded Do pass and be re-referred to the Committee on [Appropriations] with recommendation: To Consent Calendar. Result: pass.Lower
- Jan 13From committee: Do pass and re-refer to Com. on JUD. with recommendation: To Consent Calendar. (Ayes 8. Noes 0.) (January 12). Re-referred to Com. on JUD.Minor
- Jan 12
- Vote recorded Do pass and be re-referred to the Committee on [Judiciary] with recommendation: To Consent Calendar. Result: pass.Lower
- Jan 8(Pending re-refer to Com. on JUD.)Minor
- Jan 8Assembly Rule 56 suspended. (Page 3717.)
- Jan 5Re-referred to Coms. on B. & F. and JUD. pursuant to Assembly Rule 96.Minor
- Jan 5Re-referred to Com. on JUD.Minor
- Jan 5From committee chair, with author's amendments: Amend, and re-refer to Com. on JUD. Read second time and amended.Major
- 2025
- May 13Re-referred to Com. on JUD.Minor
- May 12From committee chair, with author's amendments: Amend, and re-refer to Com. on JUD. Read second time and amended.Major
- Apr 30In committee: Hearing postponed by committee.
- Apr 7Re-referred to Com. on JUD. pursuant to Assembly Rule 96.Minor
- Apr 7Re-referred to Com. on B. & F.Minor
- Apr 3From committee chair, with author's amendments: Amend, and re-refer to Com. on B. & F. Read second time and amended.Major
- Mar 25Re-referred to Com. on B.&F.Minor
- Mar 24From committee chair, with author's amendments: Amend, and re-refer to Com. on B.&F. Read second time and amended.Major
- Mar 24Referred to Coms. on B.&F. and JUD.Minor
- Feb 11From printer. May be heard in committee March 13.
- Feb 10Read first time. To print.Introduced