Article 25. Undertakings

UNDERTAKINGS

The Sections of Article 25. of the CPLR of New York:

CPLR Article 25 surety undertaking real property lien

NY CPLR § 2501. UNDERTAKING; DEFINITION

Undertaking includes:

1. Any obligation, whether or not the principal is a party thereto, which contains a covenant by a surety to pay the required amount, as specified therein, if any required condition, as specified therein or as provided in subdivision (c) section 2502 , is not fulfilled;  and

2. any deposit, made subject to the required condition, of the required amount in legal tender of the United States or in face value of unregistered bonds of the United States or of the state.

NY CPLR § 2502. SURETY; FORM OF AFFIDAVIT; TWO OR MORE UNDERTAKINGS; CONDITION; ACKNOWLEDGMENT

(a) Surety;  form of affidavit.  Unless the court orders otherwise, surety shall be:

  1. an insurance company authorized to execute the undertaking within the state, or
  2. a natural person, except an attorney, who shall execute with the undertaking his affidavit setting forth his full name and address and that he is domiciled within the state and worth at least the amount specified in the undertaking exclusive of liabilities and of property exempt from application to the satisfaction of a judgment.

(b) Two or more undertakings.  Where two or more undertakings are authorized or required to be given, they may be contained in the same instrument.

(c) Condition.  Where no condition is specified in an undertaking in an action or proceeding, the condition shall be that the principal shall faithfully and fairly discharge the duties and fulfill the obligations imposed by law, or court order.  Where the condition specifies that the undertaking is to be void upon payment of an amount or performance of an act, the undertaking shall be construed in accordance with the provisions of section 7-301 of the general obligations law .

(d) Acknowledgment.  The undertaking shall be acknowledged in the form required to entitle a deed to be recorded.

NY CPLR § 2503. UNDERTAKING OF MORE THAN ONE THOUSAND DOLLARS; REAL PROPERTY; LIEN

(a) Creation of lien.  Unless the court orders otherwise, an undertaking in an amount of more than one thousand dollars, which is not a deposit of legal tender of the United States or in face value of unregistered bonds of the United States or of the state, upon which natural persons are surety shall be secured by real property located in the state which shall be worth the amount specified in the undertaking exclusive of all encumbrances.  Such undertaking shall create a lien on the real property when recorded in the individual surety bond liens docket in the office of the clerk or register of the county where the real property is located.

(b) Affidavit of surety.  The affidavit of the surety shall contain, in addition to the information required by subdivision (a) of section 2502 :

  1. a statement that the surety or sureties is or are the sole owner or owners of the real property offered as security;
  2. a description of the property, sufficiently identified to establish the lien of the undertaking;
  3. a statement of the total amount of the liens, unpaid taxes, and other encumbrances against each property offered;  and
  4. a statement of the assessed value of each property offered, its market value, and the value of the equity over and above all encumbrances, liens and unpaid taxes.

(c) Filing of affidavit;  recording.  A duplicate original of the affidavit required by this rule shall be filed in the office of the clerk or register of the county where the real property is located.  The following information shall be entered on the individual surety bond liens docket in the office of the clerk or register of the county where the real property is located:

  1. 1. the names of the sureties listed in alphabetical order;
  2. the amount of the undertaking;
  3. a description of the real property or properties offered as security thereunder, sufficiently identified to clearly establish the lien of the undertaking;
  4. the date of such recording;
  5. the title of the action, proceeding or estate;  and
  6. the court in which the papers are filed.

(d) Release of lien.  The clerk or register of the county where the property is located shall make an entry, which shall constitute a release of the lien for all purposes and as to all persons, upon

  1. the filing of a consent acknowledged by the person for whose benefit the undertaking was given in the form required to entitle a deed to be recorded;  or
  2. the order of the court, discharging the surety, made upon motion with such notice to other persons as the court may direct.

NY CPLR § 2504. WAIVER OF UNDERTAKING; REMOVAL AND CHANGE OF PARTIES

(a) Waiver of undertaking.  Unless the court orders otherwise, an undertaking may be waived by the written consent of all parties.

(b) Removal and change of parties.  The liability on an undertaking shall remain in effect in favor of the party for whose benefit it was given, notwithstanding a removal of the action or a change of parties.

NY CPLR § 2505. FILING OF UNDERTAKING; SERVICE UPON ADVERSE PARTY; TIME WHEN EFFECTIVE

An undertaking together with any affidavit required by this article shall be filed with the clerk of the court in which the action is triable, or, upon an appeal, in the office where the judgment or order of the court of original instance is entered, and a copy shall be served upon the adverse party.  The undertaking is effective when so served and filed.

NY CPLR § 2506. EXCEPTION OF SURETY; ALLOWANCE WHERE NO EXCEPTION TAKEN

(a) Exception to surety.  If a certificate of qualification issued pursuant to subsections (b) , (c) and (d) of section one thousand one hundred eleven of the insurance law is not filed with the undertaking, a party may except to the sufficiency of a surety by a written notice of exception served upon the adverse party within ten days after receipt of a copy of the undertaking.  Where the undertaking has been served upon a party by the sheriff, the notice of exception shall be served on the sheriff and on the adverse party.  Exceptions deemed by the court to have been taken unnecessarily, or for vexation or delay, may, upon notice, be set aside, with costs.

(b) Allowance where no exception taken.  Where no exception to sureties is taken within ten days or where exceptions taken are set aside the undertaking is allowed.

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NY CPLR § 2507. JUSTIFICATION OF SURETY

(a) Motion to justify.  Within ten days after service of notice of exception, the surety excepted to or the person upon whose behalf the undertaking was given shall move to justify, upon notice to the adverse party and to the sheriff if he was served with the undertaking.  The surety shall be present upon the hearing of such motion to be examined under oath.  If the court find the surety sufficient, it shall make an appropriate indorsement on the undertaking.  A certificate of qualification issued pursuant to subsections (b) , (c) and (d) of section one thousand one hundred eleven of the insurance law shall be accepted in lieu of a justification.

(b) Failure to justify.  If a motion to justify is not made within ten days after the notice of exception is served, the undertaking shall then be without effect, except as provided in this subdivision.  Unless otherwise provided by order of court, a surety on an undertaking excepted to and not justified shall remain liable until a new undertaking is given and allowed, but the original undertaking shall be otherwise without effect.

NY CPLR § 2508. MOTION FOR NEW OR ADDITIONAL UNDERTAKING

Upon motion of any interested person, upon notice to the parties and surety, and to the sheriff, where he was required to be served with the undertaking, the court may order a new or additional undertaking, a justification or rejustification of sureties, or new or additional sureties.  Unless otherwise provided by order of court, a surety, on the original undertaking shall remain liable until such order is complied with, but the original undertaking shall be otherwise without effect.

NY CPLR § 2509. CONTROL OF ASSETS BY AGREEMENT WITH SURETY

Any person of whom an undertaking is required may agree with his surety for the deposit of any assets for which his surety may be held responsible with a bank, or safe deposit or trust company, authorized to do business in the state, if such deposit is otherwise proper and in such manner as to prevent withdrawal without the written consent of the surety or an order of court, made on notice to the surety.  The agreement shall not affect the liability of the principal or surety as established by the terms of the undertaking.

NY CPLR § 2510. DISCHARGE OF SURETY ON THE UNDERTAKING OF A FIDUCIARY

(a) Motion;  new undertaking;  accounting.  Surety on the undertaking of any fiduciary may move with notice to the person upon whose behalf the undertaking was given, to be discharged from liability for any act or omission of such fiduciary subsequent to the order of the court or the time when a new undertaking satisfactory to the court is filed.  The court may restrain such fiduciary from acting pending the order discharging such surety from liability.  Upon the hearing, the court shall order the fiduciary to give a new undertaking and to account, within such time as the court orders but not exceeding twenty days, for all his acts.  If a new undertaking is filed the fiduciary shall account for his acts up to and including the date of such filing.  Where the fiduciary does not comply with the order to account, the surety may make and file such account with the same effect as though filed by the fiduciary, and may utilize any disclosure device in obtaining information necessary for such an accounting.  The court shall make such provisions with respect to commissions, allowances, disbursements and costs as it deems just.

(b) Settlement of account.  When such account has been filed, the court, upon sufficient notice, shall order all persons interested in the proceedings to attend a settlement of the account at a time and place specified, and such settlement shall be made and the rights and liabilities of all parties to the proceeding shall be determined and enforced.  After settlement of the account, the court shall make an order relieving the surety from any act or omission of the fiduciary subsequent to the date of such order or the time when a new undertaking satisfactory to the court was filed, whichever is earlier.  Upon written demand by the fiduciary, the surety shall return any compensation paid for the unexpired portion of such suretyship.

NY CPLR § 2511. LIABILITY OF SURETY

Where two or more persons are surety on an undertaking in an action or proceeding, they shall be jointly and severally liable.  The amount recoverable from a surety shall be determined in accordance with the provisions of section 7-301 of the general obligations law .

NY CPLR § 2512. UNDERTAKING BY THE STATE, MUNICIPAL CORPORATION OR PUBLIC OFFICER

1. Any provision of law authorizing or requiring an undertaking to be given by a party shall be construed as excluding the state, a domestic municipal corporation or a public officer in behalf of the state or of such a corporation.  Such parties shall, however, be liable for damages as provided in such provision of law in an amount not exceeding an amount which shall be fixed by the court whenever it would require an undertaking of a private party.

2. Where an appeal is taken by any such party, only the court to which the appeal is taken may fix the amount which shall limit the liability for damages pursuant to this section.

NY CPLR § 2513. ACTION ON UNDERTAKING TO A PUBLIC OFFICER, BOARD OR MUNICIPAL CORPORATION

A person for whose benefit an undertaking has been given to a public officer, board or municipal corporation of the state may move, on notice to persons interested in the disposition of the proceeds, for leave to bring an action in his own name for breach of a condition.

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