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How the Homestead Exemption Works in New York

The government's policy in implementing the homestead exemption in CPLR § 5206 is to protect from seizure the reasonable living requirements of the debtor and his or her family. The same rationale applies to protecting exemption amounts in personal property as addressed in our previous blog. Whether we're discussing real or personal property, all exemptions are considered "privileges" expressly provided by law.

When a creditor obtains a court judgment on a debt, even for just credit card or medical debt, the creditor can then put a lien on your home for the amount of the judgment. With a lien in place, the creditor can then force a sale of your home to recover its judgment amount. Alternatively, the creditor can simply hold on to its lien and wait for you to sell the home before seeking to collect on the lien. 

Keep in mind that the homestead exemption does not apply to 1) mortgage foreclosure actions (first or second mortgages); 2) home equity lines of credit; 3) actions where your home was collateral for a different debt; or 4) forced sales for the non-payment of tax debt.

What is a "homestead?"

Basically, it's your home that you physically occupy as a principal residence. A vacation or weekend-home will not qualify. A homestead can be one of the following:

  • House;
  • Shares in a coop;
  • Unit(s) of a condo; or
  • A mobile home.

What is a "homestead exemption"?

It's the amount of equity in your home above "liens and encumbrances." The below amounts invested into the home are protected from seizure.  

How much money equity in the home is protected by the homestead exemption?

  • $150,000 for the following counties: Kings (Brooklyn), Queens, New York, Bronx, Richmond, Nassau, Suffolk, Rockland, Westchester and Putnam.
  • $125,000 for the following counties: Dutchess, Albany, Columbia, Orange, Saratoga and Ulster.
  • $75,000 for any other counties.

If your equity amount exceeds the exemption, the judgment creditor can force a sale of your home and apply that surplus to the judgment. The sale is subject to court discretion.

The exemption allowed in Federal Bankruptcy Court is only $22,975—a fraction of what New York allows and thus provides a stark advantage in electing New York exemptions in a bankruptcy petition.

New York permits married couples to double the homestead exemption. For example, a married couple in New York County enjoys a $300,000 exemption.

After a forced sale of the homestead, the exempt money paid to the judgment debtor is exempt for one year after payment unless that money is used to acquire another exempt homestead.

The homestead exemption continues after the death of the judgment debtor for the benefit of the surviving spouse and surviving children until the youngest child reaches majority and the surviving spouse is dead.

The Langel Firm seeks to keep you out of bankruptcy, and out of hairy situations involving judgment liens over credit-card debt. We primarily handle cases brought by unsecured creditors such as LR Credit 17, LLC and Erin Capital Management, LLC (see full debt collector list). These creditors may obtain money judgments that eventually turn into liens against your home (see this blog post to see how it's done) but I have yet to see one of these unsecured creditors attempt a forced sale of your home to satisfy such a money judgment. That is partly because of the exemption provided by CPLR § 5206.