§ 5236.Sale of real property.

This section is new. It is designed to replace the enormously cumbersome procedures relating to the sale and redemption of real property which comprise the bulk of CPA §§ 708 through 755. Under it, the purchaser at a judicial sale will take immediate title, and the judgment debtor or other creditors will not be able to redeem the property after sale. This should substantially increase the purchase price at the judicial sale and should therefore inure to the benefit of both judgment debtors and creditors.

In discussing the Illinois redemption provisions which are virtually identical to those formerly in New York, one commentator has noted:

“These provisions allow the debtor, his assigns, or any person interested in the premises through or under the debtor, to redeem any real estate sold under execution by paying the amount bid at the execution sale to the successful purchaser within twelve months of the sale. If there is a failure of such redemption, any judgment or decree creditor of the debtor can also redeem within fifteen months of the sale. The purpose of these provisions is to make the purchaser at an execution sale pay a fair price for the realty. Paradoxically, the provisions have probably had an exactly opposite effect. The right of redemption is rarely exercised because of the failure of debtors and their judgment creditors to understand the complicated redemption laws. But would-be execution sale purchasers are reluctant to bid at such sales because of the threat of redemption. Within the fifteen-month period after the sale, they may be deprived of the property and lose the benefit of any bargain they may have acquired. Further, during the fifteen-month period they cannot take possession of the real estate. The net effect of the statutory redemption provisions is the prevention of competitive bidding at executions sales, which depresses the purchase price to the detriment of both the judgment debtor and creditor. [Note, 47 Nw L Rev 548, 550–51 (1952).]”.

There is no right of redemption after an execution sale in Connecticut, Delaware (see Del Code Ann tit 10, § 4977 (1953)), Florida (see Fla Stat Ann § 55.48 (1943)), Georgia (see Ga Code Ann § 39-1303 (1957)), Louisiana, Maryland (see Md Ann Code art 83, § 2 (1957)), Mississippi (see Miss Code Ann § 1936)), Missouri, New Jersey (see NJ Rev Stat § 2A:17-41 (1952)), North Carolina (but see NC Gen Stat §§ 1-339.54–1-339.57 (1953) (debtor may pay judgment before time allowed for submitting upset bid)), Ohio (but see Ohio Rev Code Ann § 2329.33 (Baldwin 1958) (redemption allowed prior to court’s confirmation of sale)), Oklahoma (but see Turk v Mayberry, 32 Okla 66, 121 Pac 665 (1912)), Pennsylvania (see Pa Stat Ann tit 12, § 2445 (1951)), Rhode Island (see RI Gen Laws Ann tit 9, c. 26, § 19 (1956)), South Carolina (see SC Code §§ 10-1786– 10-1789 (1962)), Texas, West Virginia (see W Va Code Ann §§ 5098– 5126 (1955) passim), the District of Columbia, Hawaii, Puerto Rico or Canada.

Even in the states which have a redemption procedure, there is great variety. In Kentucky there is a right to redeem only if the purchase price at the sheriff’s sale is less than two-thirds of the appraised value of the real property. Ky Rev Stat § 426,220 (1958). In some other states, such as New Mexico, other judgment creditors have no right of redemption; the right is limited to the judgment debtor. NM Stat Ann § 24-2-21 (1953).

One rationale for permitting redemption is grounded upon the belief, stated above, that the redemption procedure encourages a higher purchase price. While this does not seem to be the case with regard to purchasers at sheriffs’ sales, it may be contended that permitting redemption by creditors and from other creditors results in a second “auction” and the further increase of the purchase price. This may be theoretically true, but multiple redemptions are a rarity and it is not clear whether an outright sale would not have brought a higher price in the first instance. There would also appear to be far better methods for assuring that fair value is obtained. Thus, a number of the states which do not have a redemption procedure provide for appraisers and require that the purchase price be at least two-thirds of the appraised value.

The creditor redemption provisions are seemingly based on the view that judgment creditors have an interest in obtaining the land, rather than the proceeds, if the sale price is low. The same result might better be achieved by giving such creditors notice of the sale, thus permitting them to bid up the price. Subd (b) of this section contains such a provision.

A second rationale of redemption is based upon a desire to give judgment debtors an opportunity to recover their real property, because ownership of real property has a special connotation. Nevertheless, in the one instance in which real property may actually be of particular significance to judgment debtors—where it is being used as a homestead—former §§ 676 and 677 provided for a sale of the property, if it was worth more than one thousand dollars, from which there was no right of redemption.

If one of the purposes of redemption is to accord debtors some opportunity to raise funds to satisfy their judgments before they lose their real property, it would seem preferable to have the period of delay before sale rather than after sale. Saskatchewan provides a delay of twelve months before sale and Rhode Island provides for a three-month period. Saskatchewan Rev Stat c. 89, § 20 (1953); RI Gen Laws Ann tit 9, c. 26, § 16 (1956).

In New York, an eight-week period would appear to be appropriate. If a judgment debtor can show sound grounds for further delaying sale, he may move for an additional delay pursuant to § 5240.

The provision in former § 643 that personal property must be executed upon before real property has been deleted; the new CPLR does not specify priority between real and personal property. See introduction to this article.

Under § 5228(a), a receiver may be appointed to sell real property. There are numerous instances in which it is preferable to sell by personal negotiation, as is done generally with real estate, rather than by public auction. See notes to § 5228. Since a receivership may involve substantial expenses, however, the courts would balance the considerations.

Subd (a) of this section provides a delay of eight weeks in lieu of the former redemption provisions. If the judgment lien is still in effect, no levy is necessary in order to sell real property. See notes to § 5235.2. The notice provisions of subd (b) have been drafted to provide public notice for the eight-week period. The provisions of this subdivision relating to place and manner of sale are derived from CPA §§ 660, 663, 712(2) and 715. The former provisions have been simplified and made parallel with those governing the sale of personal property. See notes to § 5232(a). Measurement of the time for sale of real property has been altered from delivery of the execution to first publication of a copy of the notice of sale, in order to allow more flexibility to the sheriff in handling real property sales.

Subd (b) of this section is derived from CPA § 710. No change is intended. See also notes to § 5230(a). CPA § 1077 provides that, if a final judgment has been rendered in an action to recover any part of a mortgage debt, no action to foreclose the mortgage may be commenced unless an execution on the judgment has been returned unsatisfied. The effect of §§ 1077 and 710 when read together was therefore to require an election of remedies between an action on the mortgage debt and an action to foreclose the mortgage. Section 710 prevented circumvention of the court’s power in a foreclosure action under CPA § 1083 to assess a deficiency judgment based upon the fair market value of the property rather than on the price it brought on sale.

Subd (c) of this section is derived from CPA §§ 662, 712 and 713. The time period for public notice has been lengthened to accord with the delay of eight weeks provided in subdivision (a) for all sales. Notice is required to be served on other judgment creditors in order that they may protect their liens by attending the sale. See notes to subd (e) of this section. Under the former provisions, the notice must have been posted for six weeks and published six times during that period. This subdivision thus reduces the number of publications necessary. Notice to mortgagees, since they had a right to redeem under former law, has been added. The intention that the sheriff notify creditors and mortgagees has been made express as has the duty of the judgment creditor to furnish the sheriff with the names and addresses. The phrase “two weeks” has been replaced by the more precise phrase “fourteen successive days.” Subd (d) of this section replaces parts of CPA §§ 717 and 748. The certificate procedure in former § 717, because it was related to the right of redemption, has been omitted. Instead of the former requirement that the sheriff file the proofs of notice, this subdivision only requires that they be delivered with the deed to the purchaser. Because the deed will be delivered immediately after the sale, without the fifteen-month delay of former law, former § 755, which provided for the appointment of a person to execute a deed when the officer who held the sale was unavailable, has been deleted. The last sentence of former § 748 has also been omitted. This provision is covered in CPA §§ 35 to 37, which the advisory committee has recommended be transferred to the Real Property Law. See Temp Comn on the Courts Rep II 82, 85, Leg Doc 13 (1958). The twenty-year time period in § 748 was apparently overlooked when all similar real property periods were changed to fifteen years in 1932. See id. at 518–20; Laws 1932, c. 262–265.

Subd (e) of this section is similar to § 5234, but it has been limited to real property in accordance with changes made in the liens and priorities provisions concerning personal property. The sentence regarding attachment has been deleted since it was inaccurate as applied to real property.

Formerly § 5235, add, L 1962, ch 308; renumbered § 5236, L 1962, ch 315, § 5, eff Sept 1, 1963; L 1964, ch 347, § 1; L 1965, ch 974, §§ 1-4, 6-8, eff Sept 1, 1965; L 1967, ch 57, § 1; L 1968, ch 498, § 1; L 1969, ch 1089, §§ 1, 2, eff Jan 1, 1970; L 1975, ch 570, § 1, eff Sept 1, 1975.