Public policy in New York prompted the establishment of, and recent increase to the Homestead Exemption (the “Exemption”), codified in the CPLR at §5206.  The Exemption, a statutorily created right, affords property owners (and their surviving heirs) certain protections from a creditor’s right to levy against a judgment debtor’s real property for the purpose of satisfying a personal money judgment.  The rationale behind the need for the Exemption is to ensure that a property owner is not left wholly insolvent once his primary residence is taken from him.

Since 1997, the Homestead Exemption in New York has been increased from $10,000.00 for all counties to the following limits, depending upon the location of the homestead:

  • $150,000 for the Bronx, Kings, Nassau, New York, Queens, Putnam, Richmond, Rockland, Suffolk, and Westchester;
  • $125,000 for the counties of Albany, Columbia, Dutchess, Orange, Saratoga, and Ulster; and
  • $75,000 for the remaining counties in the state.

The Exemption provides a judgment debtor the right to claim a certain level of equity in his real property as exempt from collection, above what is owed for mortgage or other liens.  For example, if a homestead is sold at a sheriff’s sale for over $200,000.00 in Kings County, the owner is automatically entitled to the first $150,000.00 before any other lienholders are paid. Thereafter, the lienholders can collect the balance of what is due in order of priority, assuming they file the necessary paperwork to do so, otherwise, their interests remain unaffected.

The Exemption only applies to a judgment debtor’s “homestead” or primary residence.  It does not extend to a property owner’s secondary or vacation home(s).  Although a person can try to claim the exemption applies to these homes as his “homestead”, such right can be easily challenged by presenting proof of one’s actual primary residence by producing the address on a driver’s license or voter’s registration.

While CPLR §5206 is applicable to the satisfaction of a money judgment (personal), it is not applicable to foreclosure sales.  As case law has held, the express language of CPLR §5206 “applies to proceedings involving ‘the satisfaction of a money judgment’ and to no other proceeding.” (emphasis added) See, Wyoming County Bank & Trust Co. v. Kiley, 75 A.D.2d 477 (4th Dept 1980).  Therefore, since a foreclosure judgment of a lien is different from collecting a money judgment, the Homestead Exemption is not an available remedy in a foreclosure proceeding.