6429 Realty Co. v. New York, 4 N.Y.3d 456 (2005)
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A lien created by the New York City Housing Preservation and Development Agency (HPD) for repairs to a building under RPAPL article 7-A is only enforceable against a subsequent good-faith purchaser if HPD complies with the notice requirements of the Housing Maintenance Code, specifically filing purchase and work orders in its records.
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Summary
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This case addresses the enforceability of liens created by HPD under RPAPL article 7-A for repairs to multi-dwelling buildings. The Court of Appeals held that HPD liens are not enforceable against subsequent good-faith purchasers if HPD fails to comply with the Housing Maintenance Code’s notice requirements, namely, the filing of purchase and work orders in its records. Plaintiff purchased a building without notice of an existing 7-A loan. HPD later filed a statement of account asserting a lien. The Court found that because HPD did not file the required purchase or work orders, the lien was not enforceable against the plaintiff, even if the City alleged that the plaintiff had actual knowledge of the loan.
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Facts
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In May 1991, a Civil Court found a dangerous condition in a 26-unit apartment building in the Bronx and appointed a 7-A Administrator. The Administrator obtained a $160,000 loan from HPD for rehabilitation. HPD disbursed the loan in increments but did not file purchase or work orders related to the loan in its public records. The work was completed by February 1993. Ownership of the property changed hands after a foreclosure sale. Plaintiff purchased the building for $5,000 in August 1993, after a title report revealed no indication of the 7-A loan.
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Procedural History
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HPD filed a statement of account in May 1994, asserting liens against the building for the $160,000 loan. Plaintiff sued to discharge the liens, claiming they were void. Supreme Court granted summary judgment to the plaintiff. The Appellate Division modified, finding a triable issue of fact as to whether plaintiff had pre-purchase knowledge of HPD’s involvement. The Court of Appeals reversed, granting summary judgment to the plaintiff.
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Issue(s)
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Whether a lien created by HPD pursuant to RPAPL article 7-A is enforceable against a subsequent purchaser in good faith when HPD failed to file purchase and work orders related to the underlying loan as required by the New York City Housing Maintenance Code.
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Holding
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No, because HPD failed to comply with the notice requirements of the Housing Maintenance Code, the lien is not enforceable against the subsequent purchaser. Specifically, HPD did not file purchase or work orders in its own records to provide constructive notice of the forthcoming lien.
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Court’s Reasoning
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The Court of Appeals analyzed RPAPL § 778 and New York City Housing Maintenance Code § 27-2144. The Court emphasized that while RPAPL § 778 states that HPD’s expenditures constitute a debt and a lien, it also specifies that the lien