New York CPLR § 5236 governs the sale of real property "on an execution" (through court order). Since real estate is often the most valuable asset possessed by a judgment debtor, this statute is invoked to determine claims, priorities, and liens of competing creditors.
If the debt on which the judgment was rendered is secured by a mortgage, this section does not apply. Stated another way, a mortgagee bank cannot can make a forced sale of your property by executing on a judgment while depriving your right of redemption (time period for borrowers in foreclosure to buy back or "redeem" their property) under New York law.[1] Worth noting is that the creditor can bypass the right of redemption—and thus utilize this forced sale by execution—if you fail to pay on a settlement stipulation with the mortgagee.[2]
But any other judgment creditor of the mortgagor (judgment debtor) can levy against the mortgaged property but the purchaser at the execution sale will take it subject to the mortgagee's lien, if senior in time or if the mortgage involved is a purchase money mortgage (when seller directly issues mortgage also known as "owner financing").
The statute is sectioned in the following format:
- Time of sale (at public auction);
- Sale of mortgage property;
- Notice of sale;
- Notice of postponement of sale;
- Effect of notice as against judgment creditors;
- Conveyance (proof of notice); and
- Disposition of proceeds of sale.
Time of Sale; Public Auction
The judgment debtor's real property interest, which has been levied upon under an execution delivered to the sheriff (or which was subject to the lien of the judgment at the time of such delivery), will be sold by the sheriff. The levy takes place between the fifty-sixth (56th) and the sixty-third (63rd) day after the first publication of a copy of the notice of sale.
The sale is pursuant to the execution at public auction at such time and place within the county where the real property is situated and as a unit or in such parcels, or combination thereof, as in his judgment will bring the highest price – unless the time is extended by order or the sale postponed by the sheriff. However, no sale may be made to that sheriff or to his deputy or undersheriff.
Note: If the property is situated in more than one county, it may be sold in a county in which any part is situated, unless the court orders otherwise.
Sale of Mortgaged Property
Real property mortgaged cannot be sold pursuant to an execution issued upon a judgment recovered for all or part of the mortgage debt.
Notice of Sale
A printed notice of the time and place of the sale containing a description of the property to be sold must be posted at least fifty-six (56) days before the sale in three public places in the town or city in which the property is located. The same three-day requirement applies if the sale is to be held in another town or city.
Service by the sheriff of a copy of said notice on the judgment debtor must be made as provided in section 308. A list must be furnished to the sheriff by the judgment creditor containing the following:
- name and address of the judgment debtor
- every judgment creditor whose judgment was a lien on the real property to be sold
- every person who had of record any interest in or lien on such property forty-five (45) days prior to the day fixed for the sale
Each person on the list must be served by the sheriff with a copy of the notice by personal delivery or by registered or certified mail, return receipt requested, at least thirty (30) days prior to the day fixed for the sale.
A copy of the notice must be published at least once in each of four periods of fourteen (14) successive day. The first period may be measured from any day between the fifty-sixth (56th) and sixty-third (63rd) days, preceding the time fixed for the sale in a newspaper published in the county in which the property is located. If there is none, an adjoining county publication will suffice.
An omission to give any notice required by this or the following subdivision, or the defacing or removal of a notice posted pursuant to either, does not affect the title of a purchaser without notice of the omission or offense.
Notice of Postponement of Sale
Any person may request that the sheriff notify him in the event that a scheduled sale is postponed. Such writing must contain the person's name and mailing address. If the sale is for any reason postponed, notice of the postponed date need be given only to:
- those whose requests, made as above provided, have been received by the sheriff at least five (5) days prior to the postponed date
- those who appeared at the time and place previously appointed for the sale
- the judgment debtor at his last known address
The notice must be in writing and served by personal delivery or by registered or certified mail, return receipt requested. It does not have to be posted or published unless the court specifies.
Effect of Notice as Against Judgment Creditors
A duly notified judgment creditor who fails to deliver an execution to the sheriff prior to the sale will have no further lien on the property and, except as against the judgment debtor, no further interest in the proceeds of the sale.
Conveyance; Proof of Notice
Within ten (10) days after the sale, the sheriff must execute and deliver to the purchaser proofs of publication, service and posting of the notice of sale, and a deed that conveys the right, title and interest sold. Proofs should be filed and recorded in the county clerk's office where the property is located.
Disposition of Proceeds of Sale
After deduction for and payment of fees, expenses and any taxes levied on the sale, transfer or delivery, the sheriff making a sale of real property pursuant to an execution must, unless the court otherwise directs:
- distribute the proceeds to the judgment creditors who have delivered executions against the judgment debtor to the sheriff before the sale, which executions have not been returned, in the order in which their judgments have priority, and
- pay over any excess to the judgment debtor
