(a) Except as otherwise ordered by the court upon a determination that the judgment creditor's lien has priority over the security interest, if property levied upon is subject to a security interest that attached prior to levy, the property or obligation is subject to enforcement of the security interest without regard to the levy unless the property is in the custody of the levying officer; but, if the execution lien has priority over the security interest, the secured party is liable to the judgment creditor for any proceeds received by the secured party from the property to the extent of the execution lien.
§ 701.040.Property Levied Upon Subject to Security Interest that Attached Prior to Levy
Title 9. Enforcement of Judgments · Division 2 · Chapter 3. Execution · Article 5. Duties and Liabilities of Third Persons After Levy · Last amended 2001 · Last verified July 28, 2026
In one sentenceSection 701.040 provides that property levied upon while subject to a prior-attaching security interest remains subject to enforcement of that security interest regardless of the levy, unless the property is in the levying officer's custody or the court finds the execution lien has priority, and requires the secured party to turn over any excess to the officer once the security interest is satisfied.
Full Text of § 701.040
(b) After the security interest is satisfied, the secured party shall deliver any excess property, and pay any excess payments or proceeds of property, remaining in the possession of the secured party to the levying officer for the purposes of the levy, as provided in Section 9615 of the Commercial Code, unless otherwise ordered by the court or directed by the levying officer.
Plain-English Summary
A levy does not erase a security interest that attached to the property before the levy happened. Subdivision (a) preserves the secured party's right to enforce that prior security interest without regard to the levy, with two exceptions: the property is in the levying officer's custody, or the court determines the creditor's execution lien has priority over the security interest. In that second situation, the secured party who collects proceeds from the property owes the judgment creditor whatever those proceeds are, up to the extent of the execution lien.
Once the security interest itself is satisfied, subdivision (b) requires the secured party to hand over anything left — excess property, excess payments, or excess proceeds — to the levying officer, following the Commercial Code's own excess-proceeds procedure under § 9615, unless the court or the levying officer directs otherwise.
Frequently Asked Questions
Does a levy wipe out a security interest that attached before the levy?
No. Section 701.040(a) generally lets the secured party enforce that prior security interest without regard to the levy.
When does the execution lien take priority over the earlier security interest instead?
Only if the property is in the levying officer's custody, or the court determines the execution lien has priority, in which case the secured party owes the creditor any proceeds received, up to the extent of the lien.
What happens to money left over after the security interest is paid off?
The secured party must deliver any excess property and pay any excess payments or proceeds to the levying officer, following Commercial Code § 9615, unless the court or officer directs otherwise.
Amendment History
EFFECTIVE 7/1/2001. Amended October 10, 1999 (Bill Number: SB 45) (Chapter 991).
Source & verification. Section text is reproduced verbatim from
the Deering's California Codes Annotated / vLex. Enacted by the California Legislature.
Last verified July 28, 2026.
· Official source
Also known as: security interest prior to levy californiasecured party levy priority california