d&c real prop law review

8/3/2019 D&C Real Prop Law Review

1/24


2/24

2

c. If the federal court is located in NJ, and renders judgment thereagainst a JD with real estate in NY, JC will have to obtain local

recognition of the judgment under article 54 of the CPLR, which is

more demanding that proceeding under article 50

III.Creation of Judicial Liens on Real Estatea. What is a Lien?i. FITFIR

1. The P with a money judgment becomes a property owner2. The Ps property interest is a lien3. A lien is a power of sale4. It is the power to sell whatever the D couldhavesold at the time the lien was

created

5. The moment of the liens birth is key!6. First Scenario

a. t1: D owns FSA in Blackacre, D grants A a mortgage (A records)b. t2:A declares default and holds sale, where X is buyer

i. at t2, A has the power to sell whatever D had at the time thelien was created, which was FSAii. X buys FSA

iii. Proceeds: FIT FIR7. Second Scenario

a. t1: D owns FSA in Blackacre, grants mortgage to A (A records)b. t2: the clerk of the county that JD is located dockets a judgment in

favor ofJC, so JC has a judgment lien against JD (here, JC is still

subject to As senior mortgage, and As power of sale cannot be

affected by Ds subsequent transfers)

c. t3:A declares default and has foreclosure sale where X is the buyeri. Proceeds: go to A first and JC second, with D getting last dibs

8. Third Scenarioa. t1:JD owns FSA in Blackacre, grants mortgage to A (A records)b. t2:JC gets a JC against JDc. t3:JC serves execution on the sheriff who schedules a sale. At the

sale, Y is the buyer (here JC can only sell whateverJD had at t2

which was FSA-A; As mortgage survives this sale and Y gets this)

d. t4:A declares a default and holds foreclosure sale, where X is buyer(here, JD no longer has anything because it was sold to Y at t3; here

the only things being sold are As mortgage and Ys equity; together

they merge and X buys FSA, free and clear of all encumbrances

ii. Second in Time, Second inRight1. For policy reasons, lien regimes empower a D to destroy a lien in order to

encourage its publication

2. At these moments, the party that is SIT is FIR3. Fourth Scenario (need to know that NY is a race notice state!)

a. t1: D owns FSA in Blackacre and grants A a mortgage. A DOESNOT record


3/24

3

b. t2: D conveys all right to X who is a BFP; X records (since X is aBFP who has recorded first and who purchased without knowledge

ofA, X takes free and clear ofAs mortgage (SIT but FIR) 5203(a)

b. The Birth of the Judicial Lien on NY Real Propertyi. It is the time at which in personam rights of the creditor become in rem rights

ii. *real property includes leasehold interests in landiii. *cooperative apartments are deemed to be personal propertyiv. This moment is established in the preamble of5203(a)

1. The implication is that JC hassomethingafter two particular points in timea. the two times at which a lien are created are localdocketing, and

levying

b. when the judgment is entered AFTER the death ofJD, no lien arises5203(a)(4)

c. The Docketing Lieni. CPLR5203(a) states that LOCAL DOCKETING is all that gives rise to a lien on real

property

ii. Where the judgment is entered in a court different from the supreme or county court,the lien arises only when a transcript of the judgment is filed with the county clerkiii. Its Duration

1. the docketing lien has a shelf life of no more than ten years 2. it is wrong to think that the docketing lien lasts ten years3. it lasts ten yearsfrom thefiling ofthe judgment-roll4. the liens duration can be considerably less than ten years5. where the judgment is from the supreme or county court, it is with this clerk

that the judgment-roll must be filed. Where a lower court entered the

judgment, the judgment-roll must be filed with the lower court, but a separate

docketing with the supreme court clerk is needed to create a docketing lien

a. executions may be issued to sheriffs through the state and the sheriffis instructed to return the execution to clerk of the county wherein

the judgment was entered 5230(b)

6. all liens die TEN YEARS after the judgment-rolliv. Extension of the Docketing Lien

1. Necessity of a Motiona. The docketing lien can be extended ifJC delivers and execution in

the waning days of the liens life

b. By making a motion under5203(b), JC can extend the docketing lienfor a period no longer than the timenecessary to complete

advertisement and sale of real property in accordance with section

5236, pursuant to an execution delivered to the sheriffc. 5236(a) says that service of an execution to the sheriff while the lien

exists authorizes the sheriff to sell, even if the lien has lapsed by the

time of the sale; essentially, this extends the life of the docketing lien

d. Kazmeroff v. Ehlinger:below is the scenarioi. JC1 dockets

ii. JC2 docketsiii. JC1 serves an execution


4/24

4

iv. JC1s docketing lien diesv. JC2 serves an execution (also on this day the sheriff filed

notice of levy pursuant to section 5235, but this provision

requires that the sheriff waits until the docketing lien is dead

before levying)

vi. Sale 1. The court awarded priority to JC1, even thoughJC1s lien was dead at the time of the sale

2. The court said the JC2 knew of the service of theexecution and so was not entitled to priority over

JC1

3. * nothing in the CPLR makes JC2s priority turn onJC2s knowledge, this should have played no part in

the courts reasoning

2. Tollinga. A D may file for bankruptcy in the waning days of the docketing

lien, in which case bankruptcys automatic stay prevents the serviceof the execution

b. Courts are divided on the question of whether or not there is a tollingprinciple that applies to extend the life of the lien

c. Gratton v. Dido Realty holds AGAINSTTOLLING on thefollowing events:

i. JC files judgment-roll in Queensii. JC dockets in Nassau, where JD had real property

iii. JD files for bankruptcyiv. JD obtains a bankruptcy discharge a year laterv. Tenth anniversary ofJCs judgment-roll

vi. D serves execution on the Nassau sheriff, six days after theexpiration ofJCs docketing lien

1. The court ruled that JCs lien died at the ten yearanniversary and therefore stands AGAINST the

tolling principle

d. Barer v. Berzakruled that the JCs right to move for an extensionwas extended by the automatic stay. Pending the motion, the

docketing lien died at the ten year anniversary, but ifJC made a

timely motion, the lien, once dead, would live again

i. This case allowed for a nunc pro tunc extension after the lienhas been dead, resembles a line of cases holding that, under

pre-judgment attachment and post-judgment executions, acreditor can revive a levy nunc pro tunc even after the levy has

lapsed

e. 5203(b) does not require the motion to be made during the life of theexecution lien

3. Motions to Extend During a Bankruptcya. Enforcing a lien violates the automatic stay


5/24

5

b. Our concern is whether the extension motion under CPLR 5203(b)can be made without offense to the stay

c. The answer is YES!d. 546(b)(1) of the Bankruptcy Code subordinates bankruptcy trustees

to state laws

e. according to In re Morton: extension under section 5203(b) simplyallows the holder of a valid lien to maintain the status quo a policynot adverse to bankruptcy law, but rather in complete harmony with

it

i. Morton went on to say that even where JC makes no section5203(b) motion to extend, the lien is extended by operation of

Bankruptcy Code section 108(c)

1. Under this provision, the docketing lien cannot dieduring a bankruptcy proceeding. JC always has

thirty days of lien life after the automatic stay is

finally terminated

f. The CPLR permits an extension for a period no longer than the timeduring which the judgment creditor was stayed. Suppose abankruptcy proceeding existed for 400 days in the middle years of a

docketing liens life. In the waning days of the lien, it is open forJC

to obtain an extension for 400 days.

g. The automatic stay prevents enforcement, but not extension!h. In theMorton case, a state court granted JCs 5203(b) motion by

extending the docketing lien for the duration of the bankruptcy

proceeding plus three months

i. this discretionary ruling was assuredly allowed by 5240 whichrefers to a courts discretion to extendingany enforcement

procedure4. Proper Parties

a. 5203(b) requires service only on the JD, yet what ifJD quitclaimsher equity to X, should X be the one served?

i. G RomaRoofing X was served5. Death of the JD

a. Death of the JD extends the life of the docketing lien 5208b. Where the execution has issued to a sheriff under a docketing lien on

real property, and where death intervenes between the execution and

the sale, the sheriff may apparently proceed without leave of the

probate court Oystermans Bank

d. The Levying Lieni. 5235: after the expiration of ten years after the filing of the judgment roll

ii. it is impossible for a creditor to get a levying lien during the time a docketing lien isavailable

iii. docketing liens preempt levying liens until the docketing lien has diediv. Community Capital v. Lee:

1. JCs docketing lien was just about to die. JC did not move to extend under5203(b). Instead, the sheriff filed a notice of levy before the expiration of ten


6/24

6

years after the filing of the judgment-roll. Sheriff then conducted an

execution sale where JC was the buyer. This court held that the levy was

invalid because it did not occur more than ten years after the judgment-roll

was filed. The sale was invalid because no lien existed at the time of the

sale. The court should have paid attention to the wording of5236(a), so

essentially the sale should have been sustained!v. just as the docketing lien has a duration, so has the levying lien

vi. it lasts only until the execution is returned 5230(c) this also states thate. Duration of a Money Judgment

i. 211(b): a money judgment lasts 20 yearsii. the period for enforcing a judgment may exceed 20 years where an earlier partial

payment or acknowledgment of the debt exists

iii. Federal judgments, in contrast, have no statutes of limitations and are perpetually valid iv. The judgment then remains viable when the docketing lien diesv. An action on the judgment can be brought after the docketing lien is dead, but before

the 20 year period has lapsed 5014

vi. In such an action a new docketing lien arises, and separately, a new judgment lasting atleast 20 years also arisesvii. 5014: the lien of a renewal judgment shall take effect upon the expiration of ten years

from the first docketing of the original judgment

viii. Maris v. Delasho:1. A docketing lien existed prior to JDs bankruptcy. In the bankruptcy, JD was

discharged. The prepetition judgment ofJC was therefore voided, but the

docketing lien was not. JC could not extend this lien by bringing an action

on the judgment prior to the lapse of the docketing lien. Had JC waited until

after the docketing lien was dead, the discharge would have prevented any

new lien from arising

ix. Bankruptcy Code 522(f)(1): permits the avoidance of judicial liens to the extent thatthey impair exemptions. The main effect of this section is to prevent judicial liens from

enjoying appreciation value from the real estate after bankruptcy

x. In re Buchardt1. : JC had a judgment docketed in 77. In July 87, before expiration of the ten

years, JC brought a timely action to extend. The extending effect of the

action meant that JD could not bring a section 522(f) avoidance action

against the lien, as the lien antedated, by grace of the extension, the

enactment of section 552(f).

a. What if, after the old lien died and before the action extension hadbeen granted, JD grants a mortgage to A? the docket will not reflect

the fact that JC is in the process of extending the lien. Is A entitledto priority overJC?

b. Gletzer v. Harris read section 5014 as requiring NOT ONLYcommencement, but completion of the action before the death of the

old lien

i. According to the appellate panel, JC had to commence andprevail before the original docketing lien died, in order to

prevail against gap transferees


7/24

7

ii. Gletzer also stated that A and B (gap transferees) must beBFPs to prevail. In summation Gletzer should be read as this:

1. After docketing, JChas a lien on local real propertyuntil ten years after the judgment roll isfiled. IfJC

files an action on the judgment in the one-year

period prior to the lapse ofthe docketing lien, JCobtains an equitable lien on JDs property, ifthe

courthas not granted the new judgment.

2. Once the court grants the new judgment, theequitable lien becomes a judicial lien

3. It protects A and B if and only if they are BFPs forvalue; it does not protect JC2 who dockets in the

equitable gap

4. 6501: Finally, JC can protect himself in the gapduring which the equitable lien exists by filing a

notice of pendency

IV.The Salea. The Requirement of a Lieni. there are two conditions precedent to the sheriffs sale.

1. JC must have delivered an execution to the sheriffa. Execution itself does not create a lien on real property, only

docketing or levying does so

2. there must have been a levy or a lien of the judgment at the time theexecution was served

b. Procedural Detailsi. The sale must have been scheduled between the 56th and 63rd day after publication of

the notice of the sale 5236(a)

ii. The sheriff, however, may postpone it. 5236(d)iii. The sale must be by auctioniv. The sheriff and the deputy CANNOT buy at the auctionv. Notice of the sale must be served on the JD and posted in three public places where the

land is located 5236(c)

vi. Notice must also be published once every two weeks in a newspaper published in thecounty

c. Sale of a Mortgaged Premisesi. The sheriff may not execute on JDs real property ifJC also holds a mortgage on the

same land to which her judicial lien attaches

ii. Reason for this restriction is that, under NY mortgage law, D has the right to redeemBlackacre by tendering to A the amount of the mortgage debt.

iii. This is called equity of redemption and it exists until the foreclosure sale isaccomplished

iv. *The CPLR provides no right of redemption1. ifJC has a docketing lien on JDs property and ifJD tenders the amount of

the judgment to JC, JC does not have to take it and can proceed maliciously

to sell JDs real property


8/24

8

2. presumably, courts will use this power to force JC1 to take the tender or losethe right of sale

3. the court of appeals said otherwise in Guardian Loan v. Early, which heldthat 5240 could not be used to OVERTURN sales solely on the basis of

inadequate bids at the auction

4. whereA holds a mortgage AND a money judgment, Amay not cause thesheriff to hold an execution sale because that would deprive JD of the rightof redemption under mortgage law

d. What is for Sale?i. FIT/FIR

1. CPLR omits to explain is what a buyer gets when real property is soldpursuant to section 5236

2. Insulation Plus v. Higgins:a. JC dockets against JDb. Pursuant to JC1s execution, sheriff sells JDs real property. JC1 is

the buyer for$1. The sheriff does not write out a deed to JC1

c. JC2 docketsd. Holding: JC1 obtained a declaration that JC2 was foreclosed. JC1could sell whatever the debtor had at t1 when JC1s lien was created;

FIT FIR

e. The purchaser at a Sheriffssale takes immediate title to the propertyand is placed in thesame position ashe wouldhave been ifthe deed

had been executed by the JD himself

3. HPD v. Ferranti:a. JC dockets against JDb. JD sells equity to Bc. B grants mortgage to Cd. B defaults and C arranges foreclosure sale, where C is the buyere. JC serves an execution on the sheriff and the sheriff sells to Xf. Analysis: at the end, JC had the power to sell whateverJD had at

first FSA. JDs transfer to t2 could not affect JCs power. Nor

could Bs transfer at t3. JD had no interest in the property at t3. C

owned the equity by virtue of buying at t4. Sheriff had the power to

sell the real property. At t3, C bought whatever B had at t3 ( when

Cs M was made). At this point, B had an estate encumbered by

JCs lien. C was forecloseable by JC at t5.

ii. SIT is FIR1. These are legislated as exceptions to the basic FIT notion

a. JLs SITi. 5203(a) liens are NO GOOD against a transfer to a purchaser

for value at a judicial sale, which shall include an execution

sale. 5203(a) Exception

ii. SCENARIO:1. JC1 dockets2. JC2 dockets3. JC2 serves an execution, but JC1 never does


9/24

9

4. Execution sale, based on JC2s execution, X is thebuyer

iii. Analysis:1. Under 5203(a)(3), JC2 has the power to foreclose

JC1, even though JC2 is second in time. X takes

free and clear ofJC12. * this section only refers to X3. so until X comes into the picture, JC1 is not

expressly subordinated to JC2

b. Purchase Money Mortgagesi. According to 5203(a)(2) JCs lien is also not good against a

transfer in satisfaction of a M given to secure the payment of

the purchase price of the JDs interest in the property

ii. SCENARIO:1. JC dockets judgment but JD owns no real estate2. JD acquires real estate from V and V delivers a deed

to JD and JD pas V with proceeds supplied by C, amortgage lender

3. Minutes afterJD acquires title from V, JD delivers amortgage deed to A; A records

4. JC serves an execution on the sheriff, who holds asale where Y is the buyer

5. A declares a default by JD and arranges aforeclosure sale, where X is the buyer

iii. Analysis:1. When JD obtains real estate, JCs lien comes into

existence

2. Section 5203(a)(2) awkwardly protects a transfer insatisfaction ofAs mortgage

3. A records once granted the mortgage4. Even if they didnt X should probably still buy free

ofJC at the end!

iv. SCENARIO:1. JC dockets a judgment but JD has no real estate2. In anticipation of receiving land from V, JD delivers

a mortgage deed to A

3. Minutes afterJD delivers deed to A, JD acquires realestate from V. V delivers deed to JD an JD pays V

with proceeds supplied by A, mortgage moneylender

4. JC serves an execution on the sheriff, who holds asale, where Y is the buyer

5. A declares default by JD and arranges foreclosuresale, where X is buyer

v. Analysis:


10/24

10

1. At t3 JD gets real estate from V and at this precisemoment, JCs lien attaches to JDs after-acquired

property; at this same moment, As mortgage lien

attaches to JDs property. The liens attach

SIMULTANEOUSLY

2. X takes free and clear ofJC and will pay a price thataccords with this status. A is the beneficiary of Xsstatus

3. As PMM is senior to JCs lien, whetherA is SIT orchronologically equal to JC

vi. Above Scenario Distinguished: HPD v. Ferranti1. JC dockets against JD who had FSA2. JD sells equity to B3. B grants mortgage to C4. After B defaults, C arranges a foreclosure sale,

where C is the buyer

5. JC serves an execution on the sheriff and the sheriffsells to Xvii. Analysis:

1. C cannot be helped here by the CPLR event thoughhe was a PML because he did not finance the

purchase price of the JDs interest in the property;

rather C financed Bs interest in the property; B was

NOT the JD here

2. Policy reasoning: if C won in the above case, Itwould be an easy matter forJD to always defeat JC

by selling to a buyer with a purchase money lender

e. Who Owns the Proceeds?i. CPLR5236(g)

1. Under this statute, only JCs who have served executions on the sheriff andalso JD have any claim to proceeds. No other junior party has an express

entitlement to proceeds. So, ifJD has conveyed a junior mortgage to B or if

JD sells the equity to X, the sheriff sells free of B or X, but JD gets the

surplus. SeniorJCs who do not serve an execution by the time of the sale, he

has no right to be paid according to priority

2. ***Above statute has a wild card:the priority rules apply unless the courtotherwise directs

a. this can be used with 5240 to invite courts to circumvent its owndrafting flaws

3. one court used this to permit a junior mortgagee to participate in the surplus,even though the transferee had no money judgment and had not served an

execution on the sheriff.

4. CPLR5239a. His allows a party to bring a proceeding to determine priority

ii. Preston Farms v. Narri, JC2 served an execution after the sale but before the sheriffhad distributed the proceeds. The court ruled that JC2 had no right to the surplus under


11/24

11

CPLR 5236(g), but that JC2 could still garnish JDs personal property, which the

sheriff happened to control

iii. 5203(a)(1)1. if there were an earlierJC than JC1, and if, subsequent to JC1s docketing,

that earlierJC receives proceeds of an execution sale, the transfer of cash to

the earlierJC is free and clear ofJC1s lien. The above statute is apersonal property rule, not a real property rule

iv. no court has permitted JC1 to retrieve proceeds from JC2, where JC1 received duenotice. The action has been allowed where JC1 was never notified of the sale. JC1 has

a claim that her due process rights have been violated

f. Bidding Ini. CPLR sets not minimum amount a buyer at an auction must bid to constitute a valid

sale

ii. New YorkMortgage Law holds open the possibility of setting aside a sale if the buyingprice is too low

iii. Wandschneider v. Bekeny1. JC bought $27,000 worth ofJDs equity for a bid of$5002. Court ordered JCs judgment reduced by $27,000, not $5003. Court also refused to cancel the sale itself or interfere with JCs title

iv. Wandschneider may have been overruled by Guardian Loan v. Early1. JC had execution sale and X, a third party, was the buyer2. X had paid $1268 for property worth $50,0003. JD moved to set aside the sale for having generated such a low price4. The relief was granted by the lower courts but the NY Court ofAppeals

REVERSED!

a. This is justified on the grounds that there was a presence of a thirdparty

b. Early court seems to be making a rule about using the 5240wildcard!

5. Wandschneider speaks to the amount ofJCs judgment in light of theauction; does not disturb the rights of the buyer at the auction sale

6. Early prohibits the use of 5240 to compromise the title that the buyer obtainsby virtue of the sheriffs deed

v. At least one court has proclaimed Wandschneider overruled by Early:1. Mikulec v. US:

a. JC docketed against JDb. JDs mother X bought JCs lien just before a scheduled execution

sale

c. The judgment in question was for$121,008.44.d. X bid for$50 and won the auctione. Among the foreclosed parties was a junior federal tax lien

i. IRS has, by federal law, a redemption right after an executionsale 28 USC 2410

f. X claimed that the redemption price was $121,008 because underWandschneider, her judgment was knocked down by the FMV of the

property. IRS claimed the redemption price was$50 plus interest


12/24

12

g. Mikulec court held that Wandschneider was correctly decidedh. The motion to knock down a judgment MUST be made by the JD

before the sheriffs deed was delivered to JC

vi. Yellow Creek v. Todd Supply1. JC obtained a judicial lien on JDs land2. JD then sold some of the encumbered land to X3. JC then obtained execution sale on what land JD still had and bid in a low

amount

4. JC then sought an execution sale of Xs land5. X responded by seekingWandschneider-type relief against JC a declaration

that JC had been paid in full in the first execution sale

a. Similar to the reasoning ofMikulec, this motion should have beendenied

6. Sheriffs deed had already been issued to JC and the setoff was being soughtby a third party, not by JD

vii. Combining Mikulec and Yellow Creek, the law would appear to be this :1. Where JD or some other party in interest except JC seeks an adjustment of

JCs judgment, the court may grant it by reducing JCs judgment by the

FMV of the property JC received by bidding in

2. A reversal of the sale is possible however where the sheriff has not issued adeed

g. Constitutional Difficultiesi. JC1 dockets

ii. JC2 docketsiii. JC2 serves and execution but JC1 never doesiv. Execution sale based on JC2s execution, X is the buyer

1. 5236(e)a. ifJC is properly notified, JC1 has no lien after the sheriff sells under

JC2s execution

b. failure to notify JC1 raises the issue of whetherJC1s due processrights to notice and a hearing have been violated

2. CPLR grants JC the task of accumulating the list of names and addresses ofJD and any person with an interest in the land to be sold (45 days before the

sale); sheriff must then send notice of the sale to everyone on the list by

certified or registered mail thirty days before the sale

v. First Federal Savingss v. McKee1. JC2 was left off the list by JC12. Court held that the buyer took free ofJC2s lien by virtue ofCPLR5236(c)

a. Provides that: an omission to give any notice required by this or thefollowing subdivision does not affect the title of a purchaser without

notice of the omission or offense

3. TheMcKee court gave some suggestions to JC2: it suggested that the salecould be overturned, if a right has been prejudiced

4. *** IfJC1 is senior and JC2 leaves JC1 off the list required by 5236(c), JC2may have the power to foreclose JC1s lien, but a court of equity will view

this power as used strictly for the benefit ofJC1


13/24

13

5. the proceeds received by JC2 are held in constructive trust forJC1vi. New Brunswick v. Markouski

1. H andW are tenants by the entirety and they jointly convey mortgage to A,A records

2. JC1 dockets judgment against H; by docketing JC1 has a lien against Hsshare

3. JC2 dockets against H4. JC1 commences an execution sale by serving an execution on the sheriff.

Under NJ law, JC1 compiles a list of property owners, but leaves JC2 off the

list. As a result the sheriff sends no notice to JC2

5. At the execution sale, X buys for$70006. A forecloses and sells to Y. There is a surplus

a. Regarding this surplus, W receives her share. H did not as he wasforeclosed at t5. X had bought Hs share, but JC 2 claimed priority

to it. Because of the notice defect at t4, JC2s lien was not

extinguished; JC2 had some part of the proceeds

vii. Law ofthe Omitted Party1. D grants mortgage to A2. D grants mortgage to B3. A starts foreclosure sale and forgets to make B a party4. At the sale, X is the buyer

viii. Analysis:1. X should have purchased a FSA estate2. This FSA is made of Ds equity, As mortgage, and Bs mortgage; all of

these interest should have been foreclosed. B, however, was not foreclosed

because she received NO NOTICE

3. A is entitled to strict foreclosure against B; B is invited to redeem by adeadline or be forever foreclosed!

ix. 5236(c)1. where X has no knowledge of the omission, Xs title must be viewed as

sacrosanct

2. where X does have notice of the defect, revival ofJCs lien is appropriate3. Where JC2 serves the execution and omits JC1 from the list, an where JC2

bids in, it should be the case that JC1 has an equitable lien on JC2s land; JC

has purchased debtor equity from JD!; consider that this acquisition by JC2

was for the benefit ofJC1 (estoppel by deed when a person purports to

convey something that she does not have and then later acquires the very

thing supposedly conveyed, the acquisition is deemed for the benefit of the

wronged transferee who had earlier received nothing)4. Where the buyer at a foreclosure sale has no notice of defective notification,

the buyers title cannot be compromised

5. JD was never served with process, resulting in a default judgment. Undersuch circumstances, JD is entitled to relief from the judgment

6. Where JC has served an execution on the sheriff and the sheriff has sold toX, Xs title must be negated

7. 5237


14/24

14

a. where the sale is reversed, poundage is not reimbursed by the sheriff;rather, JC must bear this expense

b. when the defect is NO Service of Process prior to the defaultjudgment, it must actually be true that no service of process

occurred.

V. TheRecording Acta. JCs are NOTPurchasersi. JC can foreclose any grantee of the debtor whose interest arises after the judgment is

locally docketed or levied; conversely, JC cannot foreclose a transferee whose interest

arises prior to these points in time, with the exception that prior judicial liens can be

foreclosed by subsequent JCs

ii. Pre-lien grantees of a JD may suffer consequences if they do not record theirconveyances (NY has a Race Notice Statute)

iii. ***Unrecorded conveyances are void against purchasers and other voluntary propertyclaimants.

1. a purchase connotes a voluntary conveyance2. a Judicial Lien is NOT a purchase3. unrecorded conveyances are perfectly good against subsequent lien creditors

iv. SuffolkCounty Savings v. Geiger1. JD conveyed unrecorded mortgage to A2. JC docketed judgment3. JC sought a declaration that its JL was senior to the prior unrecorded

mortgage ofA

4. Court ruled forA because JC was not a subsequent purchaser ormortgagee, he was a JC!!

v. Rivas c. McDonnell1. JC under the same circumstances, held an execution sale2. One day before auction, A records mortgage. At the auction, X was the

buyer. Court held that even if X was a BFP, Xs title was still subject to As

mortgage. JC had no standing under the recording act and so X could not

claim shelter under the status of this lien

b. Good Faith Buyers at Execution Salesi. JD grants mortgage to A and A DOES NOT record

ii. JC dockets a judgmentiii. JC serves an execution on the sheriff who schedules an execution saleiv. At the sale, X is the buyer. X is BFP who records the sheriffs deedv. Analysis:

1. JC is no purchaser; X is2. Properly, X should take free and clear ofA3. Sheriff can convey anything that JD could have conveyed4. The law in NY is contradictory on this point!

vi. Maroney v. Boyle1. A has an equitable lien on Os property (A had tendered purchase money to

O and presumably expected to receive the grant of a mortgage lien at a future

time, which never happened)

2. O conveys to JD but JD has knowledge ofA


15/24

15

3. JC dockets against JD4. JC commences an execution sale where C is the buyer; C is a BFP5. Analysis: here, C took free and clear ofA6. RULE: Sheriff inherits, as it were, Os power to sell free of earlier

unrecorded or equitable interests

vii. Clute v. Emmerich1. JD conveys a mortgage to A2. JC dockets against JD3. JD sells equity to B, B pays offAs mortgage claim; A riles the required

satisfaction piece which notifies the world that A has been paid

4. JC serves an execution on the sheriff, who schedules an execution sale5. At the execution sale, X is the buyer. X had no knowledge of B6. Analysis:

a. At t3, B as subrogated toAs mortgageb. Subrogation claims are equitable in nature; they are no good against

BFPs for value, where a mortgage satisfaction is on record

viii. What then is the NY law on JC1s ability to expropriate Ds ability to convey free ofearlier unrecorded conveyances?1. Hetzel is the only member of our trio supporting JCs power that is truly a

recording act case

ix. Domestic & Foreign Discount v. Beuerlein1. D made an unrecorded conveyance of a cotenancy to his mother2. JC docketed and, just days before its docketing lien died, JC served an

execution on the sheriff. The sheriff held the execution sale, where JC was

the buyer. Claiming to be a cotenant, JC moved for a partition sale.

3. The court ruled that JC had no status and they denied JCs motion4. IfJC was without knowledge of the unrecorded conveyance, JC, as a

purchaser at the execution sale, should have prevailedVI.Future Advances Under Senior Mortgages

a. In NY a mortgage may secure advance made to the D after the mortgage deed is deliveredb. Mortgages, if they have notice of the existence of these transferees, may not make advances

to the prejudice of junior transferees of a debtor

c. NY also follows the doctrine ofequitablesubordination: if a lender knowingly squeezesout an intervening party by making an optional future advance, the lender is equitably

subordinated to the intervening party, to the extent of the offending advance

d. Leading case is Ackerman v. Hunsickeri. JD granted A a mortgage with the future advance clause in it

ii. JC obtained a docketing lieniii. ThenA guaranteed JDs note to a lenderiv. The court held that As guaranty was a discretionary advance as to which A had

seniority generally, and JC had no cause to demand the equitable subordination ofAs

post-lien advance. Although JCs docketing was constructive notice to future parties, it

provided no notice to prior parties

e. Similar case is Wallachi. D grants A a mortgage which A does not record

ii. JC dockets a judgment


16/24

16

iii. A has priority as to discretionary future advances but the court also held open thepossibility thatA could be equitably subordinated as a matter of NY Law ifA

advanced with knowledge of the harmful effect on JC

f. Section 281(2) ofReal Property Lawi. This strengthens the position of senior mortgages making discretionary future advances

ii. This provision requires the credit line mortgage to be RECORDEDiii. Because the mortgage inWallach was NOT recorded, section 281(2) did not apply toaid the bankruptcy trustee

iv. IfA knowingly gives an advance to an insolvent D in order to squeeze the lien ofJC,then JC has a fraudulent conveyance claim against A

VII. Rentsa. The obligation of tenant to pay rent runs with the land

b. Whoever owns the reversion has the right to collect the rentc. The forward-looking obligation of a tenant to pay rent is a rent receivabled. New York law insists that the rent receivable is real propertye. Once the rent receivable is actually paid, the proceeds are considered the LLs personal

propertyf. Collection of the rent severs the dollars from the real propertyg. A lien on the reversionary interest in real property encumbers the rent receivablesh. CONVERSION: wrongful interference with the tangible personal property of another, cannot

exist here, because, once the rents are collected, they are the LLs personal property as to

which no real estate lien attaches

i. A mortgagee may obtain the appointment of a receiver in an ex parte hearing. This isdifferent from common law, which required the showing of waste or a showing that the

property was insufficiently valuable to reimburse the mortgagee for the loan upon

foreclosure.

j. The effect of appointing a receiver is that the owner of the reversion is dispossessed. The LLloses the right to collect rent receivables, which now belong to the receiver.

i. If the LL insists on collecting, the receiver may treat the money collected as held intrust for the receiver. Now if the LL pockets the rents, she commits the tort of

conversion

ii. Since the rent receivable is REAL PROPERTY, a docketing or levying lien attaches toit

iii. CPLR gives JC a right to a receiveriv. When the receiver appears, the LLs ability to collect rent free and clear of the judicial

lien should come to an end

k. SCENARIOi. JD leases to T

ii. JD grants mortgage to A. A recordsiii. JC dockets against JDiv. JC obtains a receiver to take possession ofJDs reversionary interestv. A obtains a receiver for the same purpose

l. ANALYSIS:i. At t5, A (through receiver) has an ever better right of possession. So As receiver

dispossess JCs receiver, just as JC dispossessed JD. WhateverJCs receiver has

collected from T prior to t5, JCs receiver may keep


17/24

17

ii. As receiver may collect rents going forward from t5m. S&H Building Materials v. European Bank

i. The sheriff had levied T by serving T with the execution; no receiver was appointedii. Service of the execution on T is a levy only if there is an interest of the JD in

PERSONAL property of the debtor. The rent receivable is REAL property.

iii. Oddly, once the dollars are collected by the sheriff, the dollars are personal property asto which As senior mortgage lien DOES NOT attach!iv. At the moment of the levy, the uncollected rent receivable is NOT personal property

n. CPLR distinguishes between personal property and debts as if they are separate things. InNY, only debts CERTAIN TO BECOME DUE can be levied. A rent receivable is NOT

certain to become due; rather it is a contingent obligation; T owes rent only ifTs quiet use

and enjoyment of the premises continues. Therefore, the rent was an unleviable contingent

debt.

o. ABKCO Industriesi. The court implied that the rent receivable in Glassman was both a debt under section

5201(a) and property under section 5201(b). As a debt, it could not be levied, because

it was not certain to become due. As property, the rent receivable was usufructuary toNewMexico land and so was not located in NY. The rent receivables located in NY

are real property (as well as debts). Paper levies under section 5232(a) or section

6214(a) operate only if the debtor has personal property or debts certain to become due.

ii. The breach of a past obligation is a CHOSE IN ACTION which is personal propertyof the debtor that can be levied because it has already become due!

p. 6214(a):i. a levy by service of an order of attachment upon a person other that the D is effective

only if, at the time of service,, such person owes a debt to the D or such person is in the

possession or custody of property in which such person knows or has reason to believe

the D has an interest

1. if the first sentence above is met, then the second sentence takes effectii. all debts of such a person then due and thereafter coming to the D, shall be subject to

the levy

iii. T would have had an ongoing duty to pay rent to the sheriff as rent accrued afterJanuary 2 rent in Feb, March, etc, was payable to the sheriff (not the LL) until the

maximum amount named in the order of attachment was fully secured

q. 5231i. governs income executions. This is the means by which creditors garnish wages

ii. a levy on wages only extends to 10% of incomeiii. in NY, 90% of wages are exempt from executioniv. RULES:

1. JC can get rent on NY real property by docketing a judgment in the countywhere the rent receivable is located and by obtaining the appointment of a

receiver who dispossesses JD and takes over the right to collect rents.

Whether rent can be levied pursuant to an ordinary execution however is

subject to the caprice of whether at the time of the levy T owes back rent (a

chose in action) or future rent (not Ds personal property). There is also the

somewhat loopy possibility that JC can obtain 10% of the rents pursuant to

an income execution


18/24

18

2. Only personal property and debts certain to become due may be levied byservice of the execution. As a result, rent receivables are immune from levy

under section 5232(a), though choses in action are not

VIII. After-Acquired Propertya. all the liens attach to the after-acquired party at the same time

b. Hulbert v. Hulberti. JC1 dockets, but JD has no real propertyii. JC2 dockets

iii. JC2 dockets a second, separate judgmentiv. JD inherits a one-third cotenancy in real propertyv. JC1 delivers execution to sheriff. At the sale, X is the buyer

vi. JDs cotenants move for and obtain a partition sale whereby a fee simple estate is soldto Y

c. Analysis:i. The court awarded JDs one-third share to X and JC2 on a pro rata basis

ii. This case stands for the fact that when JC1 and JC2 compete for after-acquired realproperty ofJD, they share pro rata

iii. The issuing of an execution upon one of the judgments could not affect the relativerank of the liens as between themselves

iv. The real reason JC2s liens did not disappear in JC1s execution sale is that JC1 had nopower to foreclose simultaneously created liens

d. How would this case be decided under 5203(a)?i. X would have taken the entire distribution from the partition sale. To be sure, JC1 and

JC2 were equal until the execution sale.

ii. Under this provision, JC1 docketed first, and so no transfer to JC2 is good against him.iii. Neither side can look to 5203(a) for priorityiv. In short, Hulberts holding on forecloseability has been overruled by enactment of the

CPLR, although its holding on pro rata sharing lives on!IX.JudicialLiens and Fraudulent Conveyances

a. Suppose JD fraudulently conveys real property to X. JC then dockets a judgment against JD.Does JC have a lien on Xs property?

i. The proper answer is NOb. That JD has no property left after a fraudulent conveyance was recognized by the Court of

Appeals in Bostwich v. Menck

i. JD conveyed some sort of property, personal or real, to Xii. The issue in the case was whether the receiver should recover only enough property to

satisfy JCs $200 judgment or whether the receiver could compel X to surrender all the

fraudulently conveyed property worth $15,000.

iii. The court ruled that X would be excused if he turned over$200 in propertyiv. RULE: docketing against JD cannot mean JC has a lien against Xs property

c. Luhrs v. Hancocki. JD fraudulently conveys Arizona real property to X

ii. JC dockets against JDiii. X conveys a mortgage to B. B is a BFPiv. JC initiates a foreclosure sale where Y is the buyerv. B initiates a foreclosure sale where Z is the buyer


19/24

19

vi. Y sues to eject Zvii. ANALYSIS:

1. This court held that Z had better title than Yd. NY case law strongly indicates that JC does have a lien against Xs property even before JC1

moves to set the fraudulent conveyance aside. This rule is entirely contrary to the logic of

fraudulent conveyance law, which hold that, at the time of docketing, JD had alreadyconveyed away the property. With no property, there is nothing to which JCs lien could

attach.

e. Whites Bank of Buffalo v. Farthingi. JD conveyed to X before any judgments were docketed

ii. JCs1-3 then docketed in sequenceiii. JC2 sought to execute on Xs property without making JC1 a partyiv. The court held that JC1 was not a necessary party, a conclusion that would be correct if

JC had no lien on Xs property

v. ANALYSIS:1. Even though it was the first to commence a supplementary proceeding

against X, JC2 had a lien junior to that ofJC1 and that JC1 could not beforeclosed in JC2s action. What the fraudulent conveyance proceeding

against X achieves, according to theWhite Banks court, is a declaration that

JD once again owns the property, and the docketing liens can now be

enforced without the worry that the conveyance to X might later be found

unfraudulent.

f. ChautauqueCounty Bank v. Risleyi. JC1 and JC2 both docketed against JD afterJD fraudulently conveyed land to X.

ii. JC1 was the first to bring an equitable action against X.iii. The court ruled that JC1 waived the lien by proceeding in equity, thereby allowing

JC2s lien to gain priority

iv. IfJC has a judicial lien against Xs property by docketing against JD, then BFPs forvalue from X takes subject to it. There is no BFP protection against a docketing lien in

NY. If Xs purchaser takes free ofJC1s fraudulent conveyance right, then perforce

JC1 has no lien

g. Smith v. Reidi. JD fraudulently conveyed NY real property to X

ii. JC then docketed against JD but made no effective move against X or Xs successorsiii. The SoL for fraudulent conveyance avoidance lapsediv. After the lapse, JC held an execution sale, where Y was the buyerv. Y was able to quiet title against Xs successors

vi. Properly, all that Y should have taken from the execution sale was JCs right to havethe fraudulent conveyance set aside

vii. The NY position is that when a JD makes a fraudulent conveyance, JD makes noconveyance at all. The conveyance is said to be void. In truth, the conveyance is void

as to creditors but otherwise valid.

h. 5235i. governs levy against real estate, authorizes a levy only upon any interest ofthe JD in

real property


20/24

20

1. where JD has made a fraudulent conveyance, JD has no interest remainingand until JC sues X, X is no JD!

i. Lawson v. Liberty National Banki. JD fraudulently conveyed property to X

ii. JC docketed against JD outside the preference periodiii. Before bankruptcy, X conveyed the property back to JDiv. JCs lien arose when JD re-acquired the propertyv. JCs lien should have been condemned as a voidable preference

vi. The court found that JCs docketing lien arose prior to the preference periodj. In re Brosnahan

i. JD conveyed a mortgage to A on the eve ofJCs docketing lienii. JD filed for bankruptcy

iii. A sough to have the automatic stay lifted, but the bankruptcy court denied the motionbecause the trustee had a valid fraudulent conveyance cause of action against A

iv. A had advanced funds to JD knowing that JD was insolventv. The better view is that JC has no docketing lien against property JD has already

conveyed to third parties prior to docketingvi. Docketing against JD gives JC an equitable lien against Xs property. Such an idea

would preserve Xs power to convey the property free ofJCs rights to a BFP, as

section 278(1) bestows

vii. The equitable lien would then be subject to the six year state of limitations, not the tenyear duration demanded by CPLR 5203(a) which applies to docketing liens, not

equitable liens

viii. Where JD conveys to X prior to any docketing, no JC has a lienix. CPLR gives no advice on how to proceed when real property is fraudulently conveyedx. Creditors without judgments fall under D and C Law 279

xi. What this provision implies is that:1. JDs JCs must set aside the conveyance; they may not levy, and2. JDs non-JC have rights against X no worse or no better than JDs JCs

a. Both types of creditors must proceed against X in supplementalproceedings

3. In Clarkson v. Shaheen the D fraudulently conveyed certificated securitiesto X. JC1 commenced a turnover proceeding against X as authorized by

CPLR 5225(b).

a. XX responded by claiming the transfer was in good faith and for afair consideration

b. The CPLR is clear that commencement of the action creates nojudicial lien

c. A lien arises only when a JC has secured an order for deliveryd. JC2 levied the sharese. The court nevertheless held forJC1f. The Shares were in custodial egis at the time of the levyg. This case emphasizes that the moment of in custodia legis is when X

actually delivered certificated shares to an officer of the court

4. A notice of pendency would serve to perfect JCs right to obtain Xsproperty, where X has received a fraudulent conveyance from JD


21/24

21

X. HOMESTEAD RIGHTSa. NY provides $50,000 exemption for a homestead

b. For married couples, the amount is $100,000c. A homestead is defined as property owned and occupied as a principal residenced. Weekend getaways are not homesteadse. The home is real property but it can also be personal property shares of a co op apartmentcorporation or a mobile homef. The homestead exemption is good against judicial liens only, it is certainly no good against

mortgages, mechanics liens, or criminal fines

g. A court will not upset an execution sale even if the winning bid is less than the homesteadamount, where a third party is the good faith bidder who is entitled to 5236(c) protection

h. 5206(e)i. makes $50,000 of the proceeds exempt for the debtor

ii. proceeds of a judicial sale of the homestead are exempt, but this is not so for proceedsof a mortgage foreclosure sale, where a surplus is generated

iii. First Federal v. Brown1. JD granted a mortgage to A and lost a judgment to JC2. A then foreclosed and sold to X for a price large enough to generate a $8,667

surplus

3. Before the surplus w distributed, JD filed for bankruptcy4. The ruling in the Brown court relied on Mojeski v. Siegmann in which A

foreclosed on a tenancy by the entirety; a surplus resulted and JDs spouse

claimed that the cash surplus was held by the entirety

a. TheMojeski court ruled that the surplus from a mortgage foreclosuresale was personal property, and personal property could not be held

in tenancy by the entirety. Ergo, in Brown, the creditors could have

an immediate distribution ofJDs share

5. IfJC had held an execution sale before A foreclosed, JDs monetaryexemption would have been specifically authorized by 5206(e)

a. But because A foreclosed first, JDs right to the exemption was lostiv. ASSUME:

1. JDs house is worth $150,000 in its unencumbered state2. As senior mortgage is for$100,0003. JCs judgment is $1M4. Under Brown, ifA forecloses, all of the $50,000 will be taken by JC5. But under 522(f)(1) and (2)(a), we are to take the sum of$1M plus $100,000

plus $50,000 and we are to subtract the value of the house in the absence of

any liens

6. The result is $1M worth of avoidance7. JCs judicial lien is therefore entirely avoided8. JD needs a discharge in bankruptcy

v. Farrey v. Sanderfoot1. An H andW were cotenants of their house when they divorced2. The H kept the house but owed theW cash to balance out the division of the

marital estate; this was essentially proclaimed as a judicial lien on the house

3. The H then filed for bankruptcy


22/24

22

4. Claiming the house as exempt property, he ungallantly sought to destroy hisex-Ws judicial lien under 522(f)(1)

5. The Supreme Court refused to avoid the judicial lienvi. Commercial law blunder: a lien might exist before the debtor has acquired property

1. This is the very error in Hulbert, where the court sought to dispel when itfound that docketing creates no lien until the D actually owns property

2. This case proclaimed that competing judgments docketed before debtoracquisition creates coeval liens

vii. IfJD owned property before JC docketed, JD can use 522(f)(1) avoidance to reversethe result in Brown

viii. IfJD acquired the property afterJC docketed, Farrey prevents the avoidance ofJCslien

ix. In after acquired property cases, Brown continues to be prominent and JD forfeits theexemption in the surplus from the mortgage foreclosure sale

XI.TENANCIES BYTHE ENTIRETYa. 5240

i. allows the courts to change the rules whenever they want toii. CoA has prohibited the use of 5240 in order to rescind an execution sale solely becausethe price bid by the third party buyer was too low! Guardian Loan v. Early

iii. Courts have also used 5240 to limit execution upon a tenancy by the entirety, making ita kind of exempt property

iv. In NY, creditors of the individual spouses can obtain a lien on the tenancy of the debtorspouse; at an execution sale, where H is the JD and X is the buyer, X obtains a

cotenancy withW, subject toWs right to Xs share ifW survives H

v. Neither X norW can force his or her cotenant into a partition salevi. Without 5240, a NY tenancy by the entirety is NOT exempt but it may

1. Community National Bank v. Perskya. They said NO

b. It is a discretionary provision the court may choose to use, not astanding rule of exemption!

c. Once the tenancy by the entirety is in the bankruptcy estate, thebankruptcy trustee has the power to impose a partition sale over the

opposition of a non-debtor spouse

vii. Holmes v. WT Grant1. Prohibited an execution sale of a house where H andW were both JDs2. The grounds for the restraint were simply that loss of the home was too

disruptive for the family

viii. JC can only sell JDs cotenancyix. Suppose JD and her spouse own a house by the entirety worth $200,000 and JC has a

judgment against only JD for$90,000

x. According to 522(f)(2)(A), we are to take the sum of the targeted lien 90,000, otherunavoidable liens, 0, and the exemption 50,000. From this 140,000 we are to subtract

the value ofJDs real property interest. The result is the amount of avoidance to which

JD is entitled


23/24

23

xi. Suppose we say that JD is a 50% owner of the residence; then JD can use heravoidance power to reduce JCs lien to $50,000. JDs avoidance right is defined as

$140,000 less $100,000 and 90,000 les 40,000

xii. InRe Levinson refused to consider life expectancies in calculating section 522(f)(1)avoidance

XII. TAX LIENS v. JUDICIAL LIENSa. Local Property Taxi. If the tax is not paid, the city is prepared to sell FSA if someone does not come forth to

pay up

ii. Property tax lien is a superpriority taxiii. Property taxes are very dangerous to mortgagesiv. Should there be a property tax outstanding, it will be senior to any judicial lienv. When a mortgage foreclosure sale occurs in NY, the property tax lien is also

foreclosed, and the senior property tax has the highest priority to the sales proceeds

vi. Property tax lien will disappear after the tax is paid from the proceeds of the salevii. With judicial liens, there is no such priority

b. Federal Lax Liensi. Federal legislation gives them a tax lien that arises as soon as a tax is assessedii. IRS lien has no superpriority

iii. Tax liens arise upon assessment of the tax, but unless the tax lien is recorded, it is notvalid as to judgment creditors (among other persons)

iv. This subsection makes the sensible point that in order to foreclose the IRS, notice mustbe given to the IRS. But section 7425(b)(1) also implies that, where the IRS has not

filed its notice more than thirty days before the sale the IRS is still foreclosed without

notice. When the IRS is foreclosed, we have already seen that it has a post-sale right to

redeem, by virtue of federal law

v. One thing not saved were judicial liens on real propertyvi. Where the IRS files its notice subsequent to docketing, the docketing lien is clearly

senior to the IRS lien. But where both the docketing and the IRS filing of notice

precede debtor acquisition, the IRS is senior according to the Supreme Court in United

States v. McDermott

1. JC dockets against JD, JD has not real property2. IRS files notice of a tax lien3. JD acquires property4. JD sells to X. JC and the IRS consent to the sale and agree to battle over the

proceeds.

vii. Scalia ruled that the IRS was senior, but not because JCs lien was inchoateviii. The docketing lien and tax lien attached to the property at the same time

ix. Since the IRS had already filed its notice before the judicial lien attached to thedebtors real property, the IRS had priority on the peculiar way IRC 6323 is worded

1. In other words, the meaning of 6323(a) is that, in simultaneous attachmentcases, the IRS prevails

x. 12th Scenario:1. JC dockets against JD, who owns local real property2. The IRS assesses a tax against JD3. IRS files a notice against JD


24/24

xi. JC prevails here, the IRS is junior1. Thus, the meaning of6323(a)is that the filing of notice renders the federal

tax lien extant for FIT priority purposes regardless of whether it has yet

attached to identifiable property

2. THIS ISWHATREALLY HAPPENED IN MCDERMOTTa. O grants mortgage to JD to finance the purchase price of146,000b. IRS assesses a tax against JD and has a lien on JDs mortgagec. JC dockets against JC for$67,000. This lien attaches to Ds

mortgage and has seniority over the IRSs unperfected lien

d. The IRS files notice of its liene. JD holds a mortgage foreclosure sale where JD is the buyer. JD

acquires Os equity.

f. With consent ofJC and the IRS, JD conveys to X who pays cash foran unencumbered title. The parties agree that JC and the IRS will

receive the proceeds according to their priorities

3. JDs mortgage was encumbered in sequence by the IRS at t2, and then by JCat t3. JC, second in time, was first in right under section 6323(a)thereafter, JD acquired Os equity

4. Under SCOTUSs holding, tie goes to the IRS5. The IRS was senior as to equity, but nevertheless subordinated to JC, who

had a prior lien on the mortgage portion ofJDs title

XIII. CONCLUSIONa. Legislature should repeal 5203(b) since section 5236(a) already enables a sale to proceed if

an execution is served while the docketing lien is alive

b. Add back into the CPLR a redemption right, but one that lapses at the time of the executionsale

c. 5236(c) delegates to JC the job of creating a list of those entitled to notice of an executionsale. Such a delegation is unconstitutional. The provision should be amended to inviteanyone with a foreclosed interest to apply for the surplus.

d. Federal Savings v. Brown; according to this case, JD loses all right to the real estateexemption when a senior mortgage lender forecloses a judicial lien creditor. Rather, the rule

should be that JD obtains from the proceeds of a mortgage foreclosure the amount of the

exemption, up to the amount ofJCs right to a distribution

e. Some cases hold that where JD makes a fraudulent conveyance of real property to X and JCdockets against JD, JC has a lien against Xs property; rather, the rule should be that JC must

commence an action against X and publicize it with a notice of pendency. Until then, JC has

no lien against Xs property

Currently, the sheriff may not garnish tenants ofJD. JC must obtain a receiver to collect rents. There is

no justification for this technicality and it is deserving of abolition

d&c real prop law review

Documents