JUDGMENT DEBTORS BEWARE!

First published in the February/March 2007 issue of Women’s Bar News, A Publication of the Women’s Bar Association of the State of New York

If you think the real property you are about to inherit is beyond the reach of your judgment creditors, think again. The Second Department held that immediately upon the death of the owner, judgments docketed against individuals inheriting the decedent’s real property will attach to that property. The attachment occurs regardless of whether the inheritance is pursuant to a will or the intestacy statutes. See DiSanto v. Wellcraft Marine Corporation, 540 N.Y.S.2d 260 (2d Dep’t 1986). If the real property vests in more than one person, the property is encumbered to the extent of the judgment debtor’s interest.

The principal underlying Court’s decision is that justice abhors a vacuum. To avoid the vacuum that would theoretically be created by the death of the property owner, courts have held that title to real property devised under a will vests in the beneficiary at the moment of the testator’s death. Although the executor of the estate may have the authority to partition or sell the property, title never actually vests in the executor. In other words, an executor’s authority over the property does onto preclude the property from vesting absolutely in the devisees. The same is true if the authority to sell or otherwise manage the property lies with an administrator. While the attachment does not preclude the sale of the property, the purchaser takes the property subject to any properly docketed judgment liens.

Although DiSanto was rendered over 20 years ago, many practitioners are not aware that judgments against both the decedent and the decedent’s distributees and legatees must be considered when the decedent’s real property is sold. Ignoring properly filed judgment liens against those in line to inherit real property could easily result in litigation similar to that in DiSanto, especially when aggressive judgment creditors are involved.

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