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Can Creditors Foreclose on Real Property after the 10-Year Lien Period?

In essence, CPLR § 5235 relieves a judgment creditor who wishes to sell your real property after losing its lien status after 10 years. Some examples of this statute in action are at the bottom of this blog.

CPLR § 5235, "Levy upon Real Property," while short, is not winning awards for clarity to the unpracticed:

CPLR § 5235

Preventing the Lien Gap: The Role of CPLR § 5235

CPLR § 5235 was enacted to prevent the "lien gap" from impairing a judgment creditor's right to real property after the 10-year automatic lien period following a properly filed "judgment roll"[1] and docketing of lien. For additional information on docketing a judgment, see our prior blog entry, "Can a Debt Collector Place a Lien on my Home? Yes, Here's How." which summarizes the scope of CPLR § 5203).

The Lifecycle of a Judgment Lien Under CPLR § 5235

A judgment is enforceable for 20 years under CPLR § 211(b). The judgment loses its lien status after the first 10 years. CPLR § 5236(a) ordinarily bars the sale of real property with judgments but no recorded lien. To remedy this lien-expiry problem, § 5235 permits a levying Sheriff to file a "notice of levy" with the appropriate county clerk. This action will prevent a judgment creditor's lien from being superseded by another's during sale procedures.

Reinstating a Lien Beyond the 10-Year Mark

Stated another way, "if 10 years have passed since the filing of the judgment-roll—the moment that technically begins the 10-year lien period under CPLR 5203-—the sheriff will levy against the real property by filing a “notice of levy” with the realty county's clerk. This restores the lien of the judgment while the sheriff proceeds with the sale of the realty under CPLR 5236." (Richard C. Reilly, Practice Commentaries, McKinney's Cons Laws of NY, CPLR C5236:1).

Alternatives for Judgment Creditors: Renewal and Extension 

Alternatively, a judgment creditor can renew the judgment under CPLR § 5014(1) or move to extend the lien period under CPLR § 5203.

Restoring and Extending Judgment Liens: Practical Examples Under CPLR § 5235

  1. Example of Lien Expiry: Ten years ago, a court granted a creditor a lien on Mr. Smith's property due to an unpaid debt. The 10-year mark is approaching, and the lien is about to expire. Using CPLR § 5235, the creditor has the sheriff file a notice of levy to keep the lien active, allowing them to proceed with selling Mr. Smith's property to satisfy the debt.

  2. Example of Levy Filing: Mrs. Jones has a judgment against her from a creditor. It's been 11 years, and the creditor hasn't enforced the lien, which has now lapsed. Before they can sell her property, the creditor instructs the sheriff to file a "notice of levy" under CPLR § 5235, effectively re-establishing the lien and protecting their right to proceed with the sale.

  3. Example of Judgment Renewal: A property owned by Mr. Brown is under a judgment lien, but as the 10-year mark approaches, the creditor worries about losing their lien rights. Instead of allowing the lien to lapse, the creditor opts to renew the judgment under CPLR § 5014(1), extending their lien and keeping their claim on the property secure.

5 Things You Didn't Know About CPLR § 5235

  1. Temporary Lien Creation: Even after a judgment lien expires at the 10-year mark, CPLR § 5235 allows a judgment creditor to file a notice of levy, creating a "temporary lien" on the property. This step is crucial for creditors who wish to maintain a claim on the property despite the lapse of the original lien.

  2. Notice Details Matter: The notice of levy filed must contain specific details: it has to describe the judgment, outline the execution, and accurately describe the property. This specificity is vital for the temporary lien's validity and enforceability.

  3. Clerical Recording and Indexing: Similar to the pendency of an action, the notice of levy must be recorded and indexed by the county clerk. This process is a form of public notice that the creditor is taking action to enforce their judgment.

  4. Independent of Realty Lien: The new levy is entirely independent of the realty lien that may have expired. It's not governed by the procedures applicable to the original judgment lien, giving creditors a distinct, albeit temporary, legal tool.

  5. Transfer and Enforcement Restrictions: After filing the notice of levy, no transfer of an interest in the property by the judgment debtor is effective against the judgment creditor. This protection lasts from the time of the notice of levy filing until the execution is returned, creating a window during which the creditor's claim takes precedence.

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[1] A judgment-roll consists of those integral litigation documents (i.e. summons, pleadings, judgments, and orders involving merits of case) prepared and filed by the "winner," along with the submitted judgment. CPLR § 5017.