On appeal from the Superior Court of New Jersey, Law Division-Civil Part, Morris County.
Approved for Publication August 16, 1996.
Before Judges Pressler, Keefe and A.a. Rodriguez. The opinion of the court was delivered by Rodriguez, A.a., J.A.D.
The opinion of the court was delivered by: Rodriguez
The opinion of the court was delivered by RODRIGUEZ, A.A., J.A.D.
In deciding this appeal, we hold that where no statutory notice of settlement has been filed, a judgment docketed after a deed disposing of the judgment debtor's interest in real property is delivered, but before the deed is recorded, becomes a lien on the property by virtue of N.J.S.A. 46:22-1.
The facts are undisputed. On August 15, 1991, a judgment was entered in favor of Tobar Construction Company (Tobar) and against Bernard Weissman and others. At the time the judgment was entered, Weissman owned jointly with his wife real property in Florham Park (the property). The judgment was entered in the Civil Judgment and Order docket by the Deputy Clerk of the Superior Court on August 27, 1991 and became a lien on that date. N.J.S.A. 2A:16-1. Four days earlier, Weissman had conveyed to his wife his interest in the property. The deed of conveyance was not recorded until August 30, 1991.
Tobar assigned the judgment to the Estate of Charles Punia. The estate then assigned the judgment to appellant Donald Zucker. In 1993, Mrs. Weissman sold the property to Donald L. and Goldie R. Morchower. Hudson City Federal Savings Bank (Hudson City) is the holder of the Morchower's purchase money mortgage.
Zucker moved in the Law Division to permit the sheriff to levy on the property. Zucker argued that because Weissman was an owner of record at the time the judgment was recorded, his transfer to his wife was void and of no effect against Tobar, a judgment creditor without notice of the transfer. Zucker relied on N.J.S.A. 46:22-1.
The Weissmans, Morchowers and Hudson City opposed the motion arguing that the judgment did not become a lien on the property because it was recorded after Weissman's conveyance to his wife was completed by delivery of the deed. The Morchowers also argued that before resorting to the lien Zucker must look to other sources to satisfy the judgment; and that because Weissman was a tenant by the entirety Zucker is not entitled to a levy upon the entire property.
The Judge denied the motion, concluding that the judgment was not a lien on the property. The Judge reasoned that Tobar was not a "subsequent judgment creditor" within the meaning of N.J.S.A. 46:22-1 because the judgment was entered before the conveyance. The Judge did not address the other issues raised in opposition to the motion. Zucker appeals contending that the judgment is a lien on the property by virtue of N.J.S.A. 46:22-1. We agree.
It is settled that a deed transfers a property interest upon delivery. Dautel Builders v. Borough of Franklin, 11 N.J. Tax 353, 357 (1990). However, actual or constructive notice is required to affect the rights of third parties such as judgment creditors. New Jersey is a "race notice" state that protects judgment creditors who record their instruments first without notice of unrecorded instruments. Zwaska v. Irwin, 52 N.J. Super. 27, 36-37, 144 A.2d 554 (Ch. Div. 1958).
New Jersey recording laws are intended to encourage the recording of instruments. See Van Dyke v. Carol Building Co., 36 N.J. Super. 281, 286, 115 A.2d 607 (App. Div. 1955). N.J.S.A. 46:21-1 provides that recordation of deeds constitutes notice to the world of the conveyance. N.J.S.A. 46:22-1 affords protection to third parties whose interests may be affected by the conveyance. The statute provides,
Every deed ... shall, until duly recorded ... be void and of no effect against subsequent judgment creditors without notice ... whose deed shall have been first duly recorded...; but any such deed or instrument shall be valid and operative, although not recorded, ...