NYCTL 1999-1 Trust v. 573 Jackson Avenue Realty Corp., 13 N.Y.3d 573 (2009)
A property owner seeking to exercise their equity of redemption must make an unconditional tender of the full amount due before the foreclosure sale; depositing funds with the County Clerk without clear indication of intent to redeem is insufficient.
Summary
This case clarifies the requirements for a property owner to redeem their property before a foreclosure sale. Jackson failed to pay property taxes, leading to a tax lien acquired by the Trust. After Jackson paid the initial lien amount but not the accrued interest, the Trust initiated foreclosure proceedings. Jackson attempted to stay the foreclosure sale by depositing funds with the County Clerk without specifying the purpose. The Court of Appeals held that this action did not constitute a proper redemption because Jackson failed to make an unconditional tender of the full amount owed to the Trust. The decision emphasizes that simply depositing money is not enough; the intent to redeem must be clear and communicated to the mortgagee.
Facts
Jackson failed to pay real property taxes on its Bronx property.
The Trust acquired a tax lien against the property for $2,412.75.
Jackson paid the initial lien amount nearly three years later, but not the accrued statutory interest.
The Trust commenced a foreclosure action to recover the outstanding balance.
A foreclosure sale was scheduled for August 24, 2007.
Jackson deposited $19,563.71 with the Bronx County Clerk before the sale, stating the purpose and beneficiaries were “to be determined.”
Jackson informed the Trust that the deposit “stayed” the sale.
The foreclosure sale proceeded, and a third party purchased the property.
Procedural History
Supreme Court granted summary judgment to the Trust and ordered foreclosure.
Jackson appealed the judgment of foreclosure.
Jackson moved to cancel the foreclosure sale, arguing a statutory stay was in effect.
Supreme Court denied the motion.
The Appellate Division affirmed the foreclosure judgment and the denial of the motion.
The Court of Appeals granted Jackson leave to appeal.
Issue(s)
Whether Jackson properly stayed the foreclosure sale under CPLR 5519(a)(2) or (6) or RPAPL 1341.
Whether Jackson effectively exercised its right to redeem the property before the foreclosure sale.
Holding
No, because CPLR 5519(a)(2) does not apply to judgments of foreclosure, and Jackson’s undertaking was not in a sum fixed by the court as required by CPLR 5519(a)(6). RPAPL 1341 is inapplicable as the case did not involve a partial foreclosure.
No, because Jackson did not make an unconditional tender of the full amount owed to the Trust before the sale.
Court’s Reasoning
The Court found CPLR 5519(a)(2) inapplicable because it pertains only to judgments directing the payment of money, not foreclosure judgments. CPLR 5519(a)(6) was also not applicable, as the undertaking wasn’t in a sum fixed by the court.
Regarding RPAPL 1341, the Court clarified that this provision applies only to partial foreclosures where future payments are anticipated. The statute authorizes a stay when a property owner pays a sufficient amount into court in situations “[w]here an action is brought to foreclose a mortgage upon real property upon which any part of the principal or interest is due, and another portion of either is to become due.” Since this was not a partial foreclosure, RPAPL 1341 did not apply.
Addressing the right of redemption, the Court emphasized that a property owner must make an unconditional tender of the full amount due before the foreclosure sale to redeem the property. Simply depositing funds with the County Clerk, without clearly communicating the intent to redeem and without tendering the funds to the mortgagee, is insufficient. The Court explicitly disapproved of Appellate Division cases that had engrafted RPAPL 1341’s requirements onto the common-law right of redemption, stating, “To the extent LFJ, EMC and Green Point suggest that a property owner must comply with RPAPL 1341’s requirements—including a motion for a stay and a sum deposited with the court—as preconditions for redemption, those cases should not be followed. An unconditional tender of the full amount due is all that is required.”
The Court noted that Jackson only sought to stay the sale through its deposit, never claiming it had fully satisfied the debt or making an unconditional tender.