Former President Donald Trump and other defendants have failed to meet the requirement of posting the nearly half a billion dollars in bond necessary to halt enforcement of a judge's February decision in a New York civil fraud case. This failure potentially exposes some of Trump's valuable real estate and other assets to seizure by the state.
At the stroke of midnight on Monday, the 30-day grace period provided by New York Attorney General Letitia James for Trump and his co-defendants to obtain a bond while they appeal the $464 million judgment in his New York civil fraud trial came to an end. James has hinted that her office may take action on the judgment soon.
"If he is unable to pay off the judgment, then we will pursue legal measures for judgment enforcement in court, including requesting the seizure of his assets," she stated in an interview with ABC News in February.
In a filing dated March 18, attorneys representing Trump argued that it was a "practical impossibility" for the defendants to secure such a substantial bond. As of Saturday evening, Trump had not managed to secure the bond, as per a source familiar with the situation.
"Very few bonding companies will consider a bond of anything approaching that magnitude," wrote the lawyers, Alina Habba, Clifford Robert, Christopher Kise and John Sauer. They noted that surety providers often require collateral up to 120% to guarantee the bond, driving the amount Trump might need over $500 million.
Trump claimed to have nearly $500 million in cash in a Truth Social post on March 22. In depositions and testimony in 2023, he claimed to have between $300 and $400 million.
JD Weisbrot, managing director of the surety operation at Risk Strategies, said Trump's options were "frankly very limited."
"The issue is that this type of bond is very hazardous in nature to a surety company. And why is that? It's a demand instrument, the bond guarantees that in the event that the defendant loses the appeal, that the sum be immediately made available to the plaintiff," Weisbrot said.
As a result, Weisbrot said surety companies want liquid assets as collateral, specifically cash or a letter of credit, and not hard assets like real estate.
James' office has not said what exactly it will do once it begins to enforce the judgment — which stems from a civil case in which a judge found Trump and others connected to his company liable for a decade-long scheme to use falsified real estate and net worth valuations to obtain favorable loan and insurance rates. The judge concluded Trump and others gained more than $364 million through the scheme.
According to Bruce Lederman, a real estate law specialist at DL Partners in New York, the Attorney General's office has a variety of options available to enforce the judgment against Donald Trump.
Lederman stated, "The attorney general can initiate enforcement proceedings, such as sending restraining notices, executing real property through the sheriff, freezing security accounts, notifying companies not to make payments to Donald Trump or his sons Eric and Donald Trump Jr., who also have judgments against them."
To seize Trump's real estate assets, Attorney General James could obtain judicial liens on the properties. In New York, the property sale process lasts 63 days. The sheriff's office must post sale notices in three public locations in the property's town or city and publish them four times during the period. After 63 days, a sheriff's sale is conducted, often on the courthouse steps.
However, untangling the web of ownership of some of Trump's properties may be challenging. In the event of sale, there are also loans and mortgages that could impact how much the state can even collect - not to mention the disputed valuation of Trump's properties, an issue that was at the heart of the civil fraud trial.
For properties located outside of Manhattan, James has to enter the judgment with local jurisdictions — even those as near as suburban Westchester County, New York, where her office registered the judgment on March 6.
"The New York judgment can be filed in any state and is then entitled to full faith and credit under the Constitution," said Lederman, who noted that Trump's Mar-a-Lago club might be more complicated to seize than other properties. "Enforcement rights in other states would be based upon the law of the state where property is located. For example, Florida does not allow a sale of a primary residence."
Adam Pollock, a former New York assistant attorney general, said a restraining notice would limit Trump's ability to spend freely.
"A restraining notice … says, 'Don't spend money, don't transfer any property, until you pay us.' And for good reason. You shouldn't be out, you know, fueling up your jets with $20,000 of gas, when you owe the people in the state of New York nearly $500 million," said Pollock.
Pollock explained that James' office has the authority to obtain a bank execution and hand it over to a New York sheriff or marshal. The sheriff or marshal can then enter a bank branch and empty Trump's account. Typically, a bank must wait at least 27 days before releasing the funds in an account, unless the plaintiff is the state of New York, in which case the transfer must occur immediately.
In addition, James can authorize an execution that compels Trump to surrender his personal assets.
"If I have a judgment against you, I have the right to seize any of your assets. Whether it's your valuable artwork, luxury car, electronic devices, or even the numerous LLCs you own," Pollock stated.
As the presumptive Republican nominee for president, Trump could potentially become one of the one in 100 Americans who have their wages withheld to satisfy creditors.
Adam Kaufmann, a lawyer at Lewis Baach Kaufmann Middlemiss, suggested that the state might garnish Trump's earnings and profits from establishments like the Mar-a-Lago Club.
"It is conceivable that a sitting president of the United States could have his salary garnished by a creditor," Kaufmann remarked.
