Commercial Division Blog
Lien Recorded Under Debtor's Correct Surname Valid Even Though First Name Was Incorrect
On December 23, 2020, The Appellate Division, Second Department issued a decision in Myrtle 684, LLC v. Tauber, 2020 NY Slip Op. 07901, holding that a deed recorded under a debtor's correct surname was created a valid lien even though the debtor's first name was not correctly spelled, 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. Once a judgment is docketed, it becomes a lien on the real property of the judgment debtor in the county where the judgment is docketed.
CPLR 5018(c) provides that a judgment is docketed by making an entry in the proper docket book under the surname of the judgment debtor first named in the judgment, and then sets forth that the entry shall consist of certain information set forth in enumerated subparagraphs, including, inter alia: (i) the name and last known address of each judgment debtor; (ii) the name and last known address of the judgment creditor; (iii) the sum recovered or directed to be paid in figures; (iv) the date and time the judgment-roll was filed; (v) the date and time of docketing; (vi) the court and county in which judgment was entered; and (vii) the name and office address of the attorney for the judgment creditor.
Although the statute does not indicate the consequences that ensue when a docketing entry fails to comply with each of the stated requirements of CPLR 5018(c)(1), when a judgment is docketed under a surname other than a judgment debtor's correctly spelled surname, no valid lien against the property of that judgment debtor is created. The docketing must be in the correct name of the debtor, if it is to be notice to subsequent purchasers. The judgment creditor who seeks to create a lien on real property held by the judgment debtor has the duty to ensure that the judgment reflects the full name of the judgment debtor.
In contrast, where the judgment is docketed under the correct surname but the first name docketed does not match the first name of the debtor, a valid lien attaches where the stated first name is a commonly known derivative of the debtor's first name. Similarly, a judgment lien docketed in the correct name of a debtor but at an address other than the address of the real property at issue has been held to be superior to a subsequent mortgage against the property, notwithstanding a bank's erroneous determination that the judgment lien was against a different person having the same name. In each of these cases, the judgment docket indices at issue provided notice of the existence of judgments that could potentially be clouds on the title of the respective properties, as an unsatisfied judgment of record against a seller of property renders the title unmarketable at the time of closing. Although Tauber, as the lienholder, had the burden to set forth sufficient information on the judgment docket to provide notice to future purchasers or encumbrancers, upon doing so, the purchasers or encumbrancers who failed to investigate further did so at their peril.
Thus, Tauber established his entitlement to summary judgment by demonstrating, prima facie, that (1) the lien was docketed under the correct surname, (2) the amount of the judgment was $217,245, with accumulating interest, and (3) the plaintiff and Investors Bank each had notice of the judgment lien and knew that they took their interests in the property subject to Tauber's lien. Tauber further demonstrated that any reasonable inquiry into the details of the judgment would have revealed that the $16,050 amount set forth in the judgment docket index is an incorrect amount, and that the actual amount of the judgment is the principal amount of $200,000, together with $16,050 in interest and $1,195 in costs and disbursements, for a total of $217,245, plus accumulating interest. There is no evidence in the record to suggest that either the plaintiff or Investors Bank undertook any such inquiry. Nonetheless, the plaintiff and Investors Bank are charged with constructive notice of the amount of Tauber's judgment lien and were required to make further inquiry to determine whether the lien had been satisfied or released. Having failed to do so, their contentions—that they are, respectively, a bona fide purchaser and encumbrancer for value without notice of the full amount of the judgment lien—lack merit.
In opposition to Tauber's prima facie showing, the plaintiff and Investors Bank failed to raise a triable issue of fact. Contrary to the contentions of the plaintiff and Investors Bank, the judgment docket index is merely notice of a lien and the lien is the judgment. Neither the plaintiff nor Investors Bank can demonstrate that they were prejudiced by the incorrect amount set forth in the docket index where, as here, they have constructive notice of Tauber's judgment and chose to take their interests in the property without first ensuring that the judgment was satisfied.
(Internal quotations and citations omitted).
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