In New York State’s court system, the prevailing party has the ability to execute on a judgment as soon as it has been entered by restraining assets and eventually seizing assets such as real property or bank accounts.
The losing side can avoid having money restrained without their consent only by obtaining an appeal bond and filing a Notice of Appeal. The Stay is granted automatically pursuant to CPLR 5519 upon the filing of the Notice of Appeal together with an Appeal bond.
How to Obtain an Appeal Bond
The losing party should:
1. Contact Pedersen & Sons Surety Bond Agency and discuss the situation; then
2. Decide whether they want to put up collateral or produce a financial statement to see if they can obtain a bond based on a signature.
If they cannot obtain the bond based on a signature, then the party can:
Deposit collateral. Acceptable forms of collateral are:
•A cash deposit held by the surety;
•An irrevocable letter of credit from a bank acceptable to the surety in the surety’s format;
•A pledge of publicly traded, non-retirement account securities; and
•Real property (this can be a form of collateral in certain situations).
The requested bond is generally an amount greater than the judgment sum—CPLR 5519 requires that post-judgment interest and cost are included in the amount. New York State has a 9% statutory interest running on any judgment entered. In New York State, we set the bond amount at 120% of the judgment.
Are There Disadvantages?
There are no drawbacks to obtaining an appeal bond—and it certainly has its benefits. For example, consider a scenario where the losing party pays the prevailing party upfront—it can be extremely costly and time-consuming to collect the money that has already been paid out.
Additionally, in the interim, the prevailing party could go bankrupt, spend the money, or hide assets. So without the appeal bond, it is possible to never see the money again.
In my next article, I will discuss why it is important for attorneys to verify that the appeal bond includes the post-judgment interest—and the potential ramifications for the attorney if it does not.
Contact us with your questions today.
PEDERSEN & SONS SURETY BOND AGENCY, INC.
15 Maiden Lane Suite #800
New York, NY 10038
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