The Power of a Judgment Creditor to Seize Assets Held in a Joint Account

The rules governing judgment enforcement against assets held in a joint account are not widely known, it seems, or are misunderstood. The rules are in fact well-established and generally favorable to judgment creditors. Here they are in a nutshell.

As explained by the First Department:

When two or more persons open a bank account, making a deposit of cash, securities, or other property, a presumption of joint tenancy with right of survivorship arises (Banking Law § 675 [b]; Matter of Friedman, 104 AD2d 366 [1984], affd 64 N.Y.2d 743 [1984]). The presumption extends to safe deposit boxes held jointly (Matter of First Am. Tit. Ins. Co. v. Kenderian, 157 AD3d 891, 892, 67 NYS3d 474 [2d Dept 2018]). If the presumption is applied, each named tenant “is possessed of the whole of the account so as to make the account vulnerable to the levy of a money judgment by the judgment creditor of one of the joint tenants”  [****3] (Viggiano v. Viggiano, 136 AD2d 630, 630 [2d Dept 1988]; Banking Law § 675 [b]).

Matter of N.Y. Community Bank v. Bank of America, 169 A.D.3d 35, 38 (1st Dep’t), leave denied, 33 N.Y.3d 908 (2019) (emphasis added).

In other words, the statutory presumption of joint ownership, “may be rebutted by showing that the true situation as to ownership is different and that the account was established in joint names solely as a matter of convenience, not with the intention of conferring any beneficial property interest on the other individual (Pinasco v. Del Pilar Ara, 219 A.D.2d 540, (1st Dep’t 1995)).” New York Community Bank, supra, 169 A.D.3d at 38.

If the presumption is successfully rebutted, the judgment creditor may reach only the actual interest of the judgment debtor in the funds in account. See Viggiano, supra, 136 A.D.2d at 631. If it is not, the entire account is subject to levy regardless of the source of the funds on deposit. See Matter of Signature Bank v. HSBC Bank USA, N.A., 67 A.D.3d 917 (2d Dep’t 2008) (“the opening of a joint bank account creates a rebuttable presumption that each named tenant is possessed of the whole of the account so as to make the account vulnerable to levy of a money judgment by the judgment creditor of one of the joint tenants”); Matter of BLDG Mgt. Co., Inc. v. Petersen, 2023 N.Y. Misc. LEXIS 1498 (Sup. Ct. N.Y. County 2022) (“Only where the presumption is rebutted will the judgment creditor’s levy on the jointly owned bank account be limited to the actual proportional interest held in the account by the judgment debtor”).

The burden of proof to rebut the presumption that a joint account created a joint tenancy as to the funds deposited is upon the account parties, who must introduce “direct proof to rebut the presumption that a valid joint tenancy had been intended and created [and/or] * * * substantial circumstantial proof sufficient to support an inference that the joint account had been opened for convenience only.” Sherman v. Georgopoulos, 84 A.D.2d 811 (2d Dep’t 1981); see Dowling Textile Mfg. Co. v. Land, 179 A.D.2d 621 (2d Dep’t 1992).

Finally, a claim by the non-judgment debtor joint owner that the judgment creditor can only reach half of the funds on deposit in the joint account is wrong. See Matter of Signature Bank, supra, 67 A.D.3d 917, 918 (in absence of any proof from the non-judgment debtor account parties, “the Supreme Court properly directed HSBC to turn over the  entirety of the subject joint bank accounts to the petitioner (citing inter alia, LR Credit 10, LLC v Welsh, 17 Misc. 3d 1129[A] [2007]; Rappaport, Steele & Co., P.C. v JPMorgan Chase Bank, N.A., 13 Misc. 3d 1203[A] [2006]) . . . The judgment debtor’s mere conclusory assertions are patently insufficient to rebut her ownership of the funds in the bank accounts for purposes of the turnover proceedings”).