AB 523

Under current law, interest accrues on a judgment involving the recovery of

money at an annual rate of 1 percent plus the prime rate in effect on January 1 of

the year in which the judgment is entered if the judgment is entered on or before June

30 of that year or in effect on July 1 of the year the judgment is entered if entered after

June 30 of that year, as reported by the Federal Reserve Board, until the amount is

paid. Current law also provides that if an offer of settlement is made and rejected,

the party making the offer of settlement prevails, and the judgment is greater than

or equal to the offer of settlement, interest accrues on the amount recovered at the

rate of 1 percent plus the prime rate in effect on January 1 of the year in which the

judgment is entered if the judgment is entered on or before June 30 of that year or

in effect on July 1 of the year the judgment is entered if entered after June 30 of that

year from the date on which the offer of settlement is made until the amount is paid.

Current law establishes certain procedures to be followed in small claims

actions brought in circuit court. Small claims actions include eviction actions,

actions to recover earnest money given towards the purchase of real property, and

certain other civil actions on which the amount claimed is $10,000 or less.

This bill changes the interest rate on judgments for the recovery of money in

small claims actions to 12 percent per year. This bill also changes the interest rate

on amounts recovered by a party who prevails in a small claims action after that

party made an offer of settlement that was rejected to 12 percent per year from the

day on which the offer of settlement is made until the amount is paid.