Can you use a New York debt collection judgment to lien a debtor’s co-op or condo? As a judgment creditor, you want to restrain, attach and lien as many of the judgment debtor’s assets in order to satisfy your judgment. If the restraints, attachments, liens, and executions don’t satisfy the full judgment, don’t worry. A lien on real property is good for 10 years and can be renewed before it expires.
If your lien is perfected and a sale of the property or apartment is scheduled, you will most likely be paid at closing. That is unless the buyer agrees to purchase the property subject to the lien. To perfect your lien, it is important to know if the debtor’s property is a co-op, condo, or private residence — a primary, secondary, or investment property. Land-based private residences and condominiums are considered real property. A co-operative apartment, or co-op, is considered personal property.
Distinguishing between real and personal property will dictate what steps will need to be taken to lien, sell, or acquire the debtor’s interest in the property.
Liening Real Property: Land, Private Homes, and Co-ops
To lien real property in New York, the judgment creditor needs to take a federal court judgment and register it with the county clerk in the county where the property is located. If real property is owned in one or more counties, the party must take steps to docket in each of the counties. New York does not offer a statewide lien.
Acquiring an Interest in the Debtor’s Co-op Apartment
A co-operative corporation owns the land and the building. When an individual purchases a co-op apartment they receive shares in the corporation. The purchaser becomes an owner who receives a stock certificate and a “proprietary” lease.
The shares of stock and the lease are the asset. For purposes of enforcing a judgment, these shares are treated as personal property (not real property, like a house or condominium unit).
The judgment creditor would need to file an application to the court to assemble, turn over, and transfer the shares in the co-op corporation and lease to the judgment creditor. When a bank lends against a co-op, they hold the stock and lease as security. They also have the borrower sign a security agreement and financing statements.
The lender — the bank — has first priority over the stock and lease. If a creditor is coming after shares of stock and the lease, the bank will assert its priority interest leaving the judgment creditor any surplus monies after satisfying the first and second lender.
The co-op board can not decline to transfer the shares and lease, but would still have the right of approval before the judgment creditor or other occupant takes occupancy of the co-op apartment.
Condos, co-ops, townhouses, and brownstones make up Manhattan’s skyline and New York state’s landscape. Knowing how to lien the judgment debtor’s apartment or house properly is key to collecting and satisfying your claim.
Have a debt collection matter you need resolved? Contact Frank, Frank, Goldstein and Nager for a consultation.
