In Longview International, Inc. v. Stirling the Court of Appeal for the Sixth District concludes that the recording of an abstract of judgment is a procedural act that is retroactively validated once a suspended corporation’s powers are reinstated.
An abstract of judgment recorded when a corporation is suspended for failure to pay franchise taxes is not void. At the time of recording, even though a corporation is suspended, the abstract of judgment is capable of being enforced upon the corporation obtaining a revival of its corporate powers. Revival retroactively validates the lien and makes the abstract enforceable.
The fact that revival occurred after the transfer of property is of no merit. A recorded abstract that complies with all statutory requirements is not void and provides notice to the transferee that the judgment lien may be enforced upon revival of the corporation’s powers.
The doctrine of equitable subrogation allows a court to give effect to the intentions of the parties with respect to lien priority in secured real estate transactions. The doctrine can be stated as follows: A lender who advances money to pay off an encumbrance on real property, at the request of the owner or holder of the encumbrance, with the understanding that the advance is to be secured by a first priority lien: 1) Is not a volunteer; 2) In the event the new security is not a first lien, the holder will be subrogated to the rights of the prior encumbrancer, unless the new encumbrancer is charged with “culpable and inexcusable neglect” or the superior or equal equities of others would be prejudiced. Continue reading →