Duration & Renewal Of Money Judgment – Lenders & Judgment Creditors Need To Know

This sounds like a subject for lawyers – and it assuredly is – but lenders and judgment creditors also benefit from understanding what this is about.

For a foreclosing lender, naming and serving all junior interests is a goal, that is, naming necessary parties and extinguishing their interest, thus making the foreclosure title more valuable.  (Foreclosure searches should not recite stale judgments – but lenders still want to appreciate the subject.)  Mindful that a money judgment (unlike a judgment of foreclosure and sale) has some life, the judgment creditor needs to assure its viability and maintain it if necessary.  A recent case conveniently explores all the principles and reminds us to review those here.  [Wilmington Savings Fund Society, FSB v. John, 67 Misc.3d 319, 132 N.Y.S.3d 862 (Sup. Ct. 2020)]

First, the duration of a money judgment is twenty years, but that is only as to personal property.  Its effectiveness as a lien on real property is ten years.  Therefore, from the viewpoint of a foreclosing lender, if a judgment is more than ten years old, it has expired as a lien on real property and that judgment creditor need not be named as a party defendant in a mortgage foreclosure action; the judgment creditor has nothing – at least as against the property.  From the vantage point of a judgment creditor, when a judgment has a life of ten years, the creditor may wish to avail itself of a renewal procedure and have that judgment extended for another ten year period.  (Here is where it gets a bit more interesting.)

Statute provides for renewal of a money judgment (CPLR 5014) which allows for an action for renewal to be commenced during the year prior to the expiration of ten years from the first docketing of the judgment.  The judgment that issues from such an action is designated a renewal judgment and it is to be docketed by the court clerk, to take effect upon the expiration of ten years from the first docking of the original judgment.

So, as long as the renewal judgment is obtained within that original ten year lien period, then the new lien takes effect not immediately, but only upon expiration of the first ten year lien period.  This structure critically avoids a lien gap and at the same time affords the judgment creditor a full ten years for the new lien.

The glitch in the case referred to was that the judgment creditor commenced its renewal action more than ten years after the judgment was originally docketed.  While the action was nevertheless timely, the judgment creditor was unable to avoid a lien gap.  What the judgment creditor wanted was that the renewal judgment would begin at the very moment the earlier judgment ended.  However, having not begun the renewal action within the ten year period, the court was unable to relate the renewal lien back to the end of the original ten year period.

The question then was, when does the lien of a renewal judgment where the action was begun after the conclusion of the ten years become effective?  The answer is that the renewal lien becomes effective when granted by the Supreme Court, but it is deemed granted on the date the decision and order is entered and docketed by the County Clerk, and there is a difference between those two events.  Although the ten year realty lien is realized when the judgment is docketed, it is measured not from the time of docketing, but from the filing of the judgment roll, which is the moment the judgment is entered.  In turn, a Supreme Court judgment is entered after it has been signed by the Clerk and it is filed by the Clerk.  (Arcane stuff to be sure.)

All these obscure niceties are meaningful because when a foreclosing plaintiff obtains a foreclosure search, if a money judgment has expired, the holder of that expired judgment need not be named as a party defendant.  That it may have begun an action to renew the lien is not something the foreclosing plaintiff needs to search for.  That the renewal judgment will later be granted, means only that the judgment comes on anew when it is docketed and entered.  If this occurs after the foreclosing plaintiff has begun its foreclosure action, the judgment creditor is simply bound by the lis pendens filed in the foreclosure action and the foreclosing plaintiff still didn’t have to worry about serving the judgment creditor.

The lesson in the end?  Yes there are some complexities here, but the lender’s title search should resolve them and properly advise as to when junior parties are or are not to be named in a foreclosure action.  As to judgment creditors, it is an instruction that renewal of a judgment needs to be pursued before expiration of the judgment, lest there be a deleterious gap period emerging.

Mr. Bergman, author of the four-volume treatise, Bergman on New York Mortgage Foreclosures, LexisNexis Matthew Bender (rev. 2019), is a partner with Berkman, Henoch, Peterson, Peddy & Fenchel, P.C. in Garden City, New York. He is also a member of the USFN, The American College of Real Estate Lawyers, The American College of Mortgage Attorneys, an adviser to the New York Times on foreclosure issues and writes a regular servicing column for the New York Law Journal. He is AV rated by Martindale-Hubbell, his biography appears in Who’s Who In American Law and he has been for years listed in Best Lawyers In America and New York Super Lawyers.