Real Estate Law Blog

New Changes to Kentucky’s Judgment Lien Statute Ends Perpetual Lien Renewal and Imposes New Obligations on Judgment Creditors

In the 2023 regular legislative session, the Kentucky General Assembly passed House Bill No. 83 to revise KRS § 426.720, Kentucky’s judgment lien statute. The bill was signed into law by Governor Beshear on April 6, 2023, and is effective on June 29, 2023. Three (3) major revisions mark the most significant change to the judgment lien statute since its enactment in 1988. First, under the new law, the initial limitations period for judgment liens is reduced from fifteen (15) to ten (10) years. Second, the law limits a judgment creditor’s ability to renew the lien to a single, five (5) year period beyond the initial ten (10) year limitations period. Third, to preserve the lien through a lien enforcement action that remains pending after the limitations period expires, judgment lien creditors must lodge for record a “notice of judgment lien enforcement proceeding” in the county where the notice of judgment lien is recorded. The purpose of this note is to provide a detailed overview of the changes to the judgment lien statute, including new content requirements for all judgment lien notices recorded on or after June 29, 2023, and the major revisions summarized above.   

Obtaining a judgment and collecting it are two different things. But, with entry of a money judgment, a variety of enforcement tools manifest in the judgment creditor’s tool kit. These include the right to a writ of execution, the right to garnish wages or accounts, and the right to secure the judgment debt with a lien on the debtor’s real estate. Both before and after the effective date of the new law, attachment and perfection of judgment liens in Kentucky are synchronous. In other words, the judgment lien both arises and announces itself to the world upon the recording of the notice of judgment lien and is a precondition to any priority claim against subsequent judgment creditors, mortgagees, or owners. [1] 

Additionally, the process to attach and perfect a judgment lien in Kentucky on June 29, 2023, is largely the same as the process before that date. Under Section (1) of both the new and the old law, to attach and perfect a judgment lien on the debtor’s real property, a judgment creditor must record a notice of judgment lien with the county clerk in any Kentucky county where the debtor owns an interest in real property. The notice of judgment lien, at minimum, must include the court of record where the judgment was entered, the civil action number of the lawsuit, and the amount of the judgment, including the principal, the interest rate, court costs, and any attorney’s fees that were awarded. The judgment creditor or his or her attorney must also certify on the notice of judgment lien that a copy was delivered personally or mailed to the judgment debtor at his last known address by first class mail. Importantly, the new law contains one additional requirement. On and after the June 29, 2023, the notice of judgment lien must also include “[t]he date the final judgment was entered by the court of record.”

The first major revision to the judgment lien statute reduces the statute of limitations for a judgment lien creditor to exercise his or her lien enforcement rights.  Under the new law, judgment liens recorded on or after June 29, 2023, “shall expire ten (10) years after the date the final judgment was entered by the court of record” (emphasis added). Here, the new law carves out a limitation period for a particular enforcement remedy – the judgment lien—that is not bound by the general fifteen (15) year statute of limitations to enforce judgments under KRS § 413.090(1) applicable to writs of execution, garnishments, and other collection remedies.[2] Furthermore, by measuring the limitations period from “the date of the final judgment” instead of “the date of the last execution thereon”, the new law prevents perpetual renewal of the lien and partially overrides Wade v. Poma Glass & Specialty Windows, Inc., 394 S.W.3d 886 (Ky. 2012).

In Wade, Poma Glass obtained a judgment against Wade in 1991. Wade, 394 S.W.3d at 888. In 2000, Poma Glass recorded a judgment lien. Id. In 2012, Wade filed a declaration of rights action seeking an order declaring Poma Glass’s 1991 judgment unenforceable because the judgment lien recorded by Poma Glass in 2000 was not an “execution” under KRS § 413.090(1) and was therefore ineffective to extend the limitations period for Poma Glass to enforce its judgment. Id. In its review of KRS § 413.090(1), the Court noted that the term “execution” as used in the statute had one of two meanings: either (1)  broadly referencing any formal act of carrying out or putting into effect a court order through implementation of a collection remedy,  or (2) exclusively referencing a writ of execution “issued by the court that authorizes a sheriff to levy upon the property of a judgment debtor” as the sole enforcement remedy with the power to renew a judgment. Id. at 889.  Finding no consistent meaning of the term “execution” between various provisions of the Kentucky Revised Statutes, the Court next compared the collection remedies available under the old Civil Code of Practice and the Kentucky Revised Statutes, the history of the fifteen (15) year statute of limitations statute, and prior decisions interpreting the meaning of “execution” under the Civil Code of Practice. Id. at 889 – 893.  Based on its review of those sources, the Court concluded that the General Assembly intended the broad meaning of the term “execute” to mean any act by a creditor to enforce its judgment, including recording a judgment lien, and held that the recording of Poma Glass’s judgment lien in 2000 extended the limitations period on its judgment until at least 2015.  Id. at 895.

Wade underscored a unique risk exposure to the real estate, title insurance, and mortgage industries that stemmed from the possible discrepancy between the date the last notice of judgment lien was recorded and the date of the last execution of the judgment. Until June 29, 2023, the date a notice of judgment lien is recorded is an unreliable indicator of the enforceability of the lien. For example, if a notice of judgment lien is recorded contemporaneously with entry of the judgment in 2000, a writ of execution in 2010 extends the statute of limitations of the judgment lien until 2025. Recording a notice of the writ of execution, however, is permissible but not required in Kentucky.[3] Wade put real estate, title insurance, and mortgage industry professionals on notice that an unreleased judgement lien in a title search required further due diligence and review of documents beyond the real property records in the county clerk’s office – a review of the court record in the case in which the judgment was entered is required to identify any enforcement action taken during the fifteen (15) or more years since the judgment’s entry that renewed the creditor’s right to enforce the judgment lien.  The new law removes the impediments to real estate transactions imposed by that additional step and the costs to address the risk caused by judgment liens with no discernable termination date based exclusively on the county real property records.

For judgment liens recorded before the effective date of the new law, those liens will expire “upon the earlier of. . . [t]he expiration of the limitations period for the final judgment under KRS 413.090 [i.e., fifteen (15) years from the date of the last “execution” as interpreted by Wade]; or . . . [t]en (10) years after June 29, 2023.”  The absolute last day to commence an action to enforce a judgment lien recorded before the effective date of the new law, therefore, is Tuesday, June 28, 2033.  Creditors holding enforceable judgments should therefore record new or renewed judgment liens before June 29, 2023, to ensure they benefit from the maximum ten (10) year limitation period.

The second major revision to the judgment lien statute limits a judgment creditor’s right to postpone the limitations period to file a lien enforcement action to a single, five (5) year period. For both judgments entered on, before, and after June 29, 2023, expiration of the maximum initial ten (10) year limitations period can be postponed for five (5) additional years if, “[n]ot less than one hundred twenty (120) days prior to the date of expiration. . .” the judgment creditor or the creditor’s attorney record a “notice of judgment lien renewal” in the county where the judgment lien was recorded. The judgment lien renewal must contain all the information required in the initial notice of lien, plus the renewal must state “[th]e amount of the judgment lien that remains unsatisfied.” Furthermore, just as with the initial notice of judgment lien, the judgment creditor or the creditor’s attorney must also certify on the renewal that a copy was delivered personally or sent by first class mail to the judgment debtor at his or her last known address.

The third major revision to the judgment lien statute establishes a new procedure that is required to preserve a judgment lien through the duration of a lien enforcement action if the judgment lien enforcement limitations period expires while the lawsuit remains pending.  Under the new law, the filing of a lien enforcement action in a Kentucky federal or state court suspends expiration of the judgment lien provided “[t]he judgment creditor, or the judgment creditor's counsel, files a notice of the judgment lien enforcement proceeding in the county where the notice of judgment lien is lodged for record . . .” that states the court where the proceeding was filed, the date of filing, the case number, and the type of proceeding,  and  certification by the creditor or his or her attorney that he or she delivered personally or send a copy of the notice of judgment lien enforcement proceeding to the judgment debtor at his last known address by first class mail. The notice of the judgment lien enforcement proceeding may be filed at any time before the statute of limitations to enforce the lien expires. Creditors and their counsel are cautioned that the notice of enforcement is in addition to the memorandum that is required under KRS 382.440 (i.e., the lis pendens notice) that is required to cut-off the claims of pendente lite lienholders or purchasers; however, neither KRS § 382.440 nor KRS § 426.720 (Effective June 29, 2023) prohibits additional information from appearing in the notice than that required by the respective statute. Creditors and their counsel should consider a combined notice that meets the requirements of both statutes when possible.

Under the new law, the timely filed lien enforcement action and recorded notice thereof suspends the limitations period until “[t]he date a final judgment is entered in the proceeding to enforce the judgment lien; or . . .  [t]he date the proceeding to enforce the judgment lien is dismissed.” The possibility of inadvertent termination of the judgment lien due to the finality of a judgment is a risk that creditors and their counsel must bear in mind when drafting agreed judgment, especially when consideration for the judgment is the debtor’s promised payment over a period that surpasses the limitation period for the judgment lien. Various strategies are available to address this risk, which will be discussed in a future post.

The new law further requires the judgment creditor or counsel to, within ten (10) days after dismissal or entry of the final judgment in the lien enforcement action, record a notice “in the county where the judgment lien is lodged for record” that contains all the information required to be in the notice of judgment lien enforcement, plus the date of the final judgment is entered or the case is dismissed. Creditors and their counsel are cautioned that this notice is additional to the release required by KRS 382.365 to be recorded within thirty (30) days of a judgment lien’s satisfaction. Various strategies are available to address this requirement in cases where the debtor’s promise of periodic payments is contained in an agreed judgment. These strategies will also be discussed in a future post.

Zachary Webster is an Associate of McBrayer Law. He works in the firm's Lexington office as part of the real estate and litigation practices. He can be reached at 859.231.8780, ext. 1228 or by email at zwebster@mcbrayerfirm.com

[1] Attachment and perfection of liens are asynchronous under other Kentucky statutes. For example, liens attach to personal property that secure transactions under KRS § 355.9-101, et seq. (the Universal Commercial Code – Secured Transactions) when the security agreement is fully executed. Attachment of the lien establishes the priority rights of the secured creditor against subsequent secured creditors with actual knowledge of the existing security agreement; whereas perfection of the lien requires filing a security statement with the Kentucky Secretary of State to establish the secured party’s priority rights against all subsequent secured parties who are imputed with constructive knowledge of the first party’s lien.

[2] With limited exceptions that alter the general limitations period, KRS § 413.090(1) states that a judgment creditor shall commence “within fifteen (15) years after the cause of action first accrued. . . [a]n action upon a judgment or decree of any court of this state or of the United States, or of any state or territory thereof, the period to be computed from the date of the last execution thereon[.]”

[3] In the author’s experience, recording a notice of execution is also uncommon.