If your client is awarded a judgment in a civil matter in New York State, the other party (known as the judgment debtor) might not pay up. A judgment lien can be placed on the judgment debtor’s real property to help ensure your client gets their money, but such liens have limitations.
Starting the Process
Following the judgment, your client must file a document, known as the transcript of judgment, with the county clerk in the county where the judgment debtor owns property. So if the judgment is handed down in Queens, but the judgment debtor’s property is in Nassau, the lien will not be placed on the property until the transcript is filed in Nassau.
How Long Does a Judgment Lien Last?
In New York, a judgment lien will only remain attached to the property for 10 years. If the judgment is not paid by the end of the 10-year period, your client can seek a renewal judgment on the lien that would extend it for one additional 10-year period.
How Are Lien Payments Prioritized?
Say your client is awarded a $600,000 judgment and the judgment debtor owns a house valued at $2 million. It appears that a sale of the house would provide enough money for your client to collect the entire payment due them. But that will depend on several factors, including whether there are other liens on the property, how they are prioritized, and whether the property is subject to the homestead exemption.
Liens, including mortgages, are prioritized on a “first in” basis. So any liens that were filed before your client’s lien will be paid from the proceeds first. In addition, if the home is the judgment debtor’s primary residence, it will be subjected to New York’s homestead exemption, which allows the individual to protect a certain amount of the proceeds from money judgments. The exemption varies by county but is currently nearly $180,000 in downstate counties. In addition, attorney’s fees and other costs associated with closing costs of the sale will be deducted.
Thus, even if the real property is worth more than your client’s lien, there may not be enough proceeds from a sale to fully satisfy your client’s lien.
Your client will still have their judgment against the judgment debtor. But the lien is only as good as how much is left when it’s your client’s turn to get paid.
With vast experience in judgment enforcement matters, the attorneys at Katz Melinger PLLC represent individuals and businesses in state and federal courts throughout New York. Contact Katz Melinger PLLC at 212-460-0047 or online.