MCA Judgment Liens on a New York Home: 6 Questions About Scope and Duration

In a state like New York, if you have a MCA judgment against you because of a personal guarantee, that can become a lien against your home, and you could lose your home over the debt. If the creditor docketed the judgment in the county where your home is located, that created a lien against the property. In New York such a lien lasts 10 years, but can be renewed for 10 more years. The judgment itself is good for 20 years. You could lose equity above the homestead exemption.

A lien only reaches homes in the county where the creditor filed the judgment, but the creditor can file transcripts of the judgment in other counties where it thinks you own property. Since 2019, Confessions of Judgment must be docketed only in the county where the defendant lives or does business, and within 3 years of signing.

Homestead Exemption

The lien does not attach to the home, but to the equity in it, and it attaches only to your equity in excess of the homestead exemption. That is an exemption that protects $204,825 of equity if it is your primary residence in the five New York City counties, Nassau, Suffolk, Rockland, Westchester, or Putnam county as of April 2024.

If your equity in your home is above the homestead exemption, then the creditor can bring what is called a special proceeding in the county where your home is. A court order would go to the sheriff (or a court appointed receiver) to sell your home. Any sale proceeds paid to you up to the exemption level stay exempt and cannot be collected for one year after the sale.

One other significant way you may not have equity to lose is if someone else has a judgment or mortgage recorded against the house, ahead of the judgment creditor. If you own your home with a spouse as tenants by the entirety, a creditor cannot force a sale of your spouse’s interest while the marriage lasts. The creditor must wait for you to divorce or one of you to die. However, if the debtor spouse dies first, then the surviving spouse gets the whole home, and the creditor gets nothing.

A Lien on Real Property Only Lasts for 10 Years

You can end up with a judgment that is good for 20 years but cannot reach the equity in a home. The debt on a judgment bears interest at 9% a year, as long as it remains unpaid. By default a judgment is presumed paid 20 years after the date it could have first been enforced. However, if you sign a written admission of the debt, that wipes out the time, and the 20 years start over. Any partial payment on the debt also wipes out the time and the 20 years start over.

Renewal of the lien means the creditor can sue on the judgment, and get a renewal judgment. The creditor must sue within the last year before the lien is due to expire at ten years. The renewal judgment becomes a lien as of the date the lien on the original judgment ends, there is no gap. It adds another 10 years of liability.

There is another way a lien can be extended, and that is a motion the creditor makes to the court for an extension, after notice to you to give you a chance to object. This is only a special rule for when the lien has been stayed for a while or the creditor started a sheriff sale before the lien would expire.

You cannot cheat the creditor by deeding the house to someone, a lien follows the property even if the owner changes. But if a creditor does nothing and lets the lien lapse, you are then free to sell or mortgage, and no part of the price has to be paid to the creditor. Don’t count on the creditor forgetting about the lien or missing renewal. That’s a big risk; renewal is relatively easy for the creditor. The value of your home could have grown enough that there is now equity. Perhaps an old judgment of someone else did not get renewed.

To know your position you need to mark the 10-year anniversary date of the filing of the judgment, and the one-year before that date, because in that last year the creditor must start renewal. Then you need to know how much equity you have that exceeds the homestead exemption. In bankruptcy a lien that impairs the homestead exemption can be avoided, so the amount of the exemption may matter there.

File Satisfaction Within 20 Days After Payment

If you pay in full, the creditor must file satisfaction within 20 days after payment. If it fails to, and the judgment was for at least $5,000, it owes you $500.