Does New York's homestead exemption protect a co-op apartment from a judgment creditor?

This page explains New York law. For people who own the home they live in, the homestead exemption can protect a large part of their equity from a judgment creditor, and co-op owners are covered expressly. Asserting the homestead exemption to protect a debtor's primary residence from forced sale or execution is one of the matters listed on KOR Law LLP's post-judgment and enforcement defense page.

A homestead, in this sense, is the home a debtor owns and actually lives in as a principal residence. The exemption does not erase the judgment. It sets aside a protected slice of the home's equity that a creditor collecting a money judgment cannot reach.

What property qualifies?

CPLR 5206(a) exempts four types of property, if owned and occupied as a principal residence: a lot of land with a dwelling on it, shares of stock in a cooperative apartment corporation, units of a condominium apartment, and a mobile home. The exemption protects value "above liens and encumbrances," up to a dollar limit that depends on the county. The statute's base figures are adjusted every three years by the Department of Financial Services; the current figures took effect April 1, 2024 and are next scheduled to change on April 1, 2027.

The department's notice adds that the 2024 amounts do not apply to restraining notices served or executions carried out before April 1, 2024. Its table applies the same adjusted figures to CPLR 5206(d) and (e), the subdivisions on surplus value and sale proceeds discussed below. For the other exemptions, see what property a New York judgment creditor cannot take.

How does "value above liens" work for a co-op?

The exemption protects equity, not the full price of the apartment. A simple illustration, using made-up numbers: a Manhattan co-op worth $700,000 with a $400,000 share loan has $300,000 of equity. The first $204,825 of that equity is exempt. Under CPLR 5206(d), the exemption is not void because the property is worth more than the limit, but the judgment's lien attaches to the surplus, here about $95,175. If the same apartment had only $150,000 of equity, all of it would fall within the exemption.

Because the numbers drive the outcome, valuation can become the main dispute. The creditor and the debtor may offer competing evidence of what the shares are worth and what the share loan and other liens are. Where a special proceeding raises triable issues of fact, CPLR 410 requires them to be tried promptly.

Can the creditor still force a sale?

Only of a homestead worth more than the exemption, and only through the court. CPLR 5206(e) lets a judgment creditor bring a special proceeding in the county where the homestead is located for a sale by a sheriff or receiver. If the court orders a sale, it must divide the proceeds so that each person's share matches his or her interest. The debtor's share, up to the exempt amount, is paid to the debtor and stays exempt for one year, unless the debtor buys a new exempt homestead within that year, in which case the exemption follows the money used for the new home.

The sale itself may be run by a court-appointed receiver, a person the court puts in charge of property to collect a judgment; see when a New York court can appoint a receiver to collect a judgment. When a sheriff sells real property under an execution, the sale must take place between the 56th and 63rd day after the notice of sale is first published, and the notice must be posted at least 56 days ahead and served on the debtor (CPLR 5236(a), (c)). Our page on property executions and sheriff sales walks through that process.

Creditors may also try to reach co-op shares as personal property, for example by asking the court to order them turned over. The homestead exemption is a defense in those proceedings too; our page on what a turnover proceeding is in New York and how to respond to one explains the procedure. Anyone who claims an interest in levied property can also bring a proceeding to determine adverse claims before it is applied to the judgment (CPLR 5239), and the court can limit or condition any enforcement step (CPLR 5240).

What changes the answer for your home?

• Purchase price judgments. The exemption does not apply if the judgment was recovered wholly for the purchase price of the property (CPLR 5206(a)).
• Taxes. A homestead is not exempt from taxation or from a sale for unpaid taxes or assessments (CPLR 5206(a)).
• Not your principal residence. The property must be owned and occupied as a principal residence. The exemption ends if the property stops being occupied as a residence, except for a suspension of up to one year caused by injury to or destruction of the dwelling (CPLR 5206(c)).
• Choosing between exemptions. The $1,325 cash and personal property exemption in CPLR 5205(a)(9) is available only if no homestead exemption is claimed.
• A judgment for the mortgage debt. Mortgaged real property cannot be sold under an execution issued on a judgment for all or part of that mortgage debt (CPLR 5236(b)). A mortgage foreclosure is a separate kind of court case, explained in what happens after you are served with a foreclosure summons in New York.
• How title is held. A deed of real property to a married couple creates a tenancy by the entirety unless it says otherwise, and so does a transfer of co-op shares to a married couple made on or after January 1, 1996 (EPTL 6-2.2(b), (c)). That raises a separate protection when only one spouse owes the judgment.

The exemption also survives the owner. It continues for the benefit of a surviving spouse and children until the youngest child reaches majority and the spouse dies (CPLR 5206(b)).

For example: a sale petition against a Queens co-op

Common mistakes co-op and home owners make

• Assuming the whole apartment is protected. Only equity up to the county limit is exempt; the judgment lien attaches to any surplus (CPLR 5206(d)).
• Moving out or renting the apartment while the case runs. The exemption depends on occupying the home as a principal residence, and it ends when that stops, outside the one-year damage exception.
• Leaving liens off the numbers. The exemption is measured above liens and encumbrances. A share loan, a home equity line or another lien that is not counted makes the surplus look bigger than it is.
• Missing the answer date on a sale petition. In a special proceeding, the answer can be due as little as two days before the hearing, and the hearing can be as little as eight days after service.
• Letting sale proceeds sit. The exempt share of the proceeds is protected for one year after it is paid, unless it goes into a new homestead within that year.

What to do this week

1. Find your stock certificate and proprietary lease, or your deed, and see exactly whose names are on them and how title is described.
2. Get a current statement for every share loan, mortgage and home equity line on the home.
3. Gather proof that the home is your principal residence, such as tax returns, a driver's license and utility bills at that address.
4. If you have been served with a petition, write down the hearing date and count back two days for your answer.
5. If an information subpoena asked about your home, answer it fully and keep a copy; see what to do about an information subpoena in New York.
6. Pull together the papers on our checklist for when a judgment is enforced and arrange to speak with a lawyer before the hearing.

Frequently asked questions

Does the exemption protect a second home or a rental unit?

No. CPLR 5206(a) covers only property owned and occupied as a principal residence. A vacation home, an investment apartment or a unit you rent out and do not live in does not qualify, though your other exemptions still apply.

What if my spouse and I own the co-op together?

Co-op shares transferred to a married couple on or after January 1, 1996 are held as tenants by the entirety unless the transfer says otherwise (EPTL 6-2.2(c)). When only one spouse owes the judgment, that form of ownership limits what the creditor can do. See whether a creditor of one spouse can force the sale of a home owned as tenants by the entirety in New York; the two protections can apply at the same time.

Does the homestead exemption apply in bankruptcy?

A debtor domiciled in New York may claim the state's exemptions in bankruptcy, and those include the CPLR 5206 homestead (Debtor and Creditor Law 282). The debtor may instead opt for the federal exemptions in 11 U.S.C. 522 (Debtor and Creditor Law 285). Which set protects more depends on the facts, so compare them with a bankruptcy lawyer before filing.

Can I sell or refinance with a judgment against me?

A judgment docketed with the clerk of the county where real property sits is a lien on it from docketing until ten years after the judgment-roll is filed (CPLR 5203(a)). That lien travels with the property when you try to sell or borrow against it. Our page on selling or refinancing with a judgment lien covers the options.

Can a court limit the creditor's efforts?

Yes. CPLR 5240 lets the court, on its own or on a motion, deny, limit, condition or regulate any enforcement procedure. We explain when that relief fits in whether a court can limit or stop a creditor's collection efforts.

Is the amount the same everywhere in New York City?

Yes. Kings, Queens, New York, Bronx and Richmond counties, the five boroughs, all fall in the top tier, currently $204,825. For Brooklyn cases, see foreclosure and judgment defense for Brooklyn (Kings County) cases.