Commercial Division Blog

Posted: January 7, 2020 / Categories Commercial, Judgment and Collection

Judgment Creditor Did Not Create Lien on Debtor's Property Because Debtor's Name Was Misspelled

On December 18, 2019, the Second Department issued a decision in Matter of Fischer v. Chabbott, 2019 NY Slip Op. 09002, holding that a judgment creditor failed to create a lien on a debtor's property because the debtor's name was misspelled on the judgment the creditor had docketed, explaining:

CPLR 5203(a) gives priority to a judgment creditor over subsequent transferees with regard to the debtor's real property in a county where the judgment has been docketed with the clerk of that county. Pursuant to CPLR 5018(c), a judgment is docketed when the clerk makes an entry under the surname of the judgment debtor consisting of the name and last known address of the judgment debtor. A judgment is not docketed against any particular property, but solely against a name. Once docketed, a judgment becomes a lien on the real property of the debtor in that county.

Here, it is undisputed that when the judgments were docketed, Julius's surname was spelled incorrectly. Because the judgments were not docketed under the correct surname, no valid lien against Julius's interest in the subject property was created. Therefore, Fischer was not entitled to a determination that his interest in the subject property was superior to that of Mayrav, whose interest vested upon the judgment of divorce. Although Mayrav failed to argue in the Supreme Court that Fischer did not have a valid lien on the subject property in light of the undisputed fact that Julius's surname was misspelled, that issue can be raised for the first time on appeal because it is one of law which appears on the face of the record and could not have been avoided if it had been raised at the proper juncture. Accordingly, that branch of the petition which sought a determination that Fischer's interest in the subject property was superior to that of Mayrav should have been denied.

As to the funds in the escrow account, contrary to Fischer's contention, his service of the restraining notice coupled with his money judgments against Julius did not serve to give him priority over Mayrav's interest in those funds. A lien on personal property is created when the judgment creditor delivers an execution to a sheriff. The service of a restraining notice pursuant to CPLR 5222 does not confer priority upon the judgment creditor in the form of a lien on the judgment debtor's property. Therefore, a judgment creditor serving a restraining notice ordinarily is required to take further steps in enforcing his judgment, such as an execution or levy upon the judgment debtor's property, in order to prevent the intervening rights of third parties from taking precedence over his claim against the judgment debtor. Here, Fischer did not deliver a property execution to the sheriff regarding the escrow account, and the judgments and restraining notice were not sufficient to establish a lien prior to entry of the divorce judgment.

(Internal quotations and citations omitted) (emphasis added).

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