An all-out effort to exert pressure on a debtor
The creditor obtained a judgment against the debtor for $455,000. Despite the judgment creditor having taken various enforcement proceedings to collect its judgment, including the issuance of an execution to the New York City Marshal and levying upon the debtor’s bank accounts, the creditor was unable to recover the remaining balance due on the judgment, which was about $260,000.
Petition to Sell the Judgment Debtor’s Home
The debtor owned his home located in Brooklyn. The judgment creditor retained Richard A. Klass, Esq., Your Court Street Lawyer, to petition the court for permission to sell the debtor’s home in order to satisfy the judgment.
In the petition brought under Civil Practice Law and Rules [CPLR] Section 5206(e),[Footnote 1] the judgment creditor set forth the requirements:
- The Judgment has been docketed with the County Clerk’s Office (See, CPLR 5018).
- The Deed to the real property in the judgment debtor’s name.
- The amount of the debtor’s “homestead exemption,” which, in 2025, is $204,825. [Footnote 2]
- Naming all interested parties, including the judgment debtor, mortgage holders, lienors or others with security or possessory interests in the property as may be identified in a title search.
- An appraisal showing the fair market value of the real property.
Judgment Debtor Bears the Burden of Proving Exemption
In response to the petition, the judgment debtor claimed, if the judge granted the petition to sell the home, a forced sale would be an unnecessarily severe remedy harmful to the debtor. The debtor requested that the judge consider less drastic remedies; however, the debtor did not offer any suggestions (such as disclosing other sources of income or identifying other property to be sold to satisfy the judgment). Also, the debtor did not disagree with the $12 million appraisal submitted with the petition, supporting the contention that the net equity in the home far exceeded the homestead exemption.
In Matter of Balanoff v Niosi, 16 AD3d 53, 56 [2d Dept 2005], the Second Department recognized it is the judgment debtor’s burden of proving property is exempt; otherwise, the property is subject to a judgment creditor’s enforcement measures, holding:
Traditionally, the judgment debtor bears the burden of claiming and proving the applicability of an exemption, but only when the exempt status of the property is unclear to the judgment creditor or a levying officer (see Matter of Livingston, 30 Misc.2d 71, 75–76, 211 N.Y.S.2d 897, affd. 14 A.D.2d 264, 220 N.Y.S.2d 434; Wilcox v. Howe, 12 N.Y.S. 783, 783–785; 11 Weinstein–Korn–Miller, N.Y. Civ. Prac. ¶ 5205.06, at 52–116). For example, the debtor has the burden of claiming and proving the applicability of an exemption under CPLR 5205(a)(7) (formerly Civ. Prac. Act § 665[7] ) [necessary working tools and implements] (see e.g. Gilewicz v. Goldberg, 69 App.Div. 438, 439, 74 N.Y.S. 984; Tuckman v. Hayward, 26 Misc.2d 45, 46, 204 N.Y.S.2d 655; Wilcox v. Howe, supra).
The recognition of the judgment creditor’s strong rights to enforce its judgment against a judgment debtor’s property was the subject of the recent enforcement proceeding involving former Mayor Giuliani. The court noted that: “Federal and state law carve out a limited set of properties that are exempt from collection, balancing the interests of the judgment creditor and that of the judgment debtor. Article 52 sets forth the assets that are exempt from collection. Those assets include items like stoves and home heating equipment, health aids, a refrigerator, a cell phone, and other objects that the New York Legislature considers necessities for living. See Reilly, Practice Commentaries, McKinney’s Cons Laws of NY, Westlaw, N.Y. C.P.L.R. 5205 (“[T]he exempted items are those deemed necessities by the Legislature”). In recognition of the emotional necessity of certain objects, the Legislature also included a category of exemption for “a wedding ring; a watch, jewelry and art not exceeding one thousand dollars in value.” N.Y. C.P.L.R. 5205(a)(6). The burden is on the judgment debtor to show that property is exempt, and Defendant has not satisfied that burden. See Tuckman v. Hayward, 204 N.Y.S.2d 655, 657 (Sup. Ct. 1960) (“The burden of proof of establishing that such items as are claimed to be exempt are in fact exempt is upon the judgment debtor.”).” Freeman v Giuliani, 24-MC-00353 (LJL), 2024 WL 4546883, at *6 [SDNY Oct. 22, 2024], appeal dismissed (Feb. 25, 2025).
Judgment Creditor Can Pursue All Enforcement Measures
It was argued that the judgment creditor could pursue the sale of the debtor’s home as an enforcement measure, and the debtor does not get to pick and choose how the creditor seeks to enforce its judgment. CPLR Article 52 provides the judgment creditor with the right to enforce its judgment against almost all property owned by a judgment debtor. See, CPLR 5201(b): “Property against which a money judgment may be enforced. A money judgment may be enforced against any property which could be assigned or transferred, whether it consists of a present or future right or interest and whether or not it is vested, unless it is exempt from application to the satisfaction of the judgment.”
“As long as a judgment remains unsatisfied, all means available by law are open to the judgment creditor for the satisfaction of that debt, and the judgment creditor is not limited in the number or type of enforcement actions it may file and pursue. The judgment creditor has the right to avail of any remedy that the legislature provides as a means of, or as an aid in, enforcing the judgment. It is the policy of the law to assist rather than to make it more difficult for the judgment creditor to enforce the judgment.” 54 N.Y. Jur. 2d Enforcement and Execution of Judgments § 1.
The judge granted the petition and signed an Order directing, pursuant to CPLR 5206(e), the sale by the New York City Sheriff of the debtor’s home; the first proceeds arising from the sale not exceeding $204,825 be paid to the debtor for his homestead exemption; the next moneys be applied towards the remaining balance due on the judgment, together with the costs and disbursements of the proceeding; and the surplus from the sale proceeds be paid to the debtor.
Footnotes
[1]
CPLR 5206 (e) Sale of homestead exceeding one hundred fifty thousand dollars for the counties of Kings, Queens, New York, Bronx, Richmond, Nassau, Suffolk, Rockland, Westchester and Putnam; one hundred twenty-five thousand dollars for the counties of Dutchess, Albany, Columbia, Orange, Saratoga and Ulster; and seventy-five thousand dollars for the remaining counties of the state in value. A judgment creditor may commence a special proceeding in the county in which the homestead is located against the judgment debtor for the sale, by a sheriff or receiver, of a homestead exceeding one hundred fifty thousand dollars for the counties of Kings, Queens, New York, Bronx, Richmond, Nassau, Suffolk, Rockland, Westchester and Putnam; one hundred twenty-five thousand dollars for the counties of Dutchess, Albany, Columbia, Orange, Saratoga and Ulster; and seventy-five thousand dollars for the remaining counties of the state in value. The court may direct that the notice of petition be served upon any other person. The court, if it directs such a sale, shall so marshal the proceeds of the sale that the right and interest of each person in the proceeds shall correspond as nearly as may be to his right and interest in the property sold. Money, not exceeding one hundred fifty thousand dollars for the counties of Kings, Queens, New York, Bronx, Richmond, Nassau, Suffolk, Rockland, Westchester and Putnam; one hundred twenty-five thousand dollars for the counties of Dutchess, Albany, Columbia, Orange, Saratoga and Ulster; and seventy-five thousand dollars for the remaining counties of the state, paid to a judgment debtor, as representing his interest in the proceeds, is exempt for one year after the payment, unless, before the expiration of the year, he acquires an exempt homestead, in which case, the exemption ceases with respect to so much of the money as was not expended for the purchase of that property; and the exemption of the property so acquired extends to every debt against which the property sold was exempt. Where the exemption of property sold as prescribed in this subdivision has been continued after the judgment debtor’s death, or where he dies after the sale and before payment to him of his portion of the proceeds of the sale, the court may direct that portion of the proceeds which represents his interest be invested for the benefit of the person or persons entitled to the benefit of the exemption, or be otherwise disposed of as justice requires.
[2]
As specified in CPLR 5253(a), various exemptions granted to a judgment debtor, including the homestead exemption, adjust every three years. Debtor exemptions are published on the NYS Department of Financial Services website at: https://www.dfs.ny.gov/industry_guidance/exemption_from_judgments
Richard A. Klass, Esq.
Your Court Street Lawyer
Richard A. Klass, Esq., maintains a law firm engaged in civil litigation at 16 Court Street, 28th Floor, Brooklyn, New York. He may be reached at (718) COURT●ST or RichKlass@courtstreetlaw.com with any questions.
Prior results do not guarantee a similar outcome.
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