New York Law Review

Tag: foreclosure

  • NYCTL 1999-1 Trust v. 573 Jackson Avenue Realty Corp., 13 N.Y.3d 573 (2009): Clarifying Redemption Rights in Foreclosure Actions

    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.

  • Goldstein v. Gold, 48 N.Y.2d 830 (1979): Pleading Requirements for Conspiracy to Discourage Bidders at Foreclosure Sale

    Goldstein v. Gold, 48 N.Y.2d 830 (1979)

    A complaint alleging conspiracy to discourage bidders at a foreclosure sale, even with largely general allegations, states a cause of action sufficient to withstand a motion to dismiss for insufficiency of the pleading.

    Summary

    This case concerns a dispute over a mortgage foreclosure and allegations of a conspiracy to discourage bidders at the foreclosure sale. The Court of Appeals held that while general allegations of conspiracy typically require evidentiary support to survive summary judgment, they are sufficient to state a cause of action and withstand a motion to dismiss based on the insufficiency of the pleading. The court reinstated the plaintiff’s second cause of action, which alleged a conspiratorial postponement of the foreclosure sale.

    Facts

    Angelo Sardo was a party defendant in a mortgage foreclosure action. Travitsky purchased Sardo’s fee interest at a Sheriff’s sale after the filing of a notice of pendency related to the foreclosure. The plaintiffs brought a cause of action alleging a conspiracy to discourage bidders by postponing the foreclosure sale.

    Procedural History

    The lower court dismissed the second cause of action in the complaint. The Court of Appeals modified the order, reinstating the second cause of action, and otherwise affirmed the lower court’s decision.

    Issue(s)

    1. Whether the notice of pendency was constructive notice to Travitsky of the mortgage foreclosure action, binding him to the outcome of the foreclosure action.
    2. Whether the allegations of conspiracy to discourage bidders by postponing the foreclosure sale were sufficient to state a cause of action and withstand a motion to dismiss based on insufficiency as a pleading.

    Holding

    1. Yes, because Angelo Sardo was properly made a party defendant in the foreclosure action, and the purchase of Sardo’s fee interest at the Sheriffs sale, which occurred after the filing of the notice of pendency, charged Travitsky with constructive notice of the foreclosure action, and he became bound by the foreclosure action to the same extent as if he had been made a party.
    2. Yes, because the largely general allegations of conspiracy to discourage bidders by postponing the foreclosure sale, for the purposes of a motion to dismiss based on insufficiency as a pleading, do state a cause of action.

    Court’s Reasoning

    The Court reasoned that because Angelo Sardo was a party to the foreclosure action and the notice of pendency was filed before Travitsky purchased Sardo’s interest, Travitsky was bound by the foreclosure action. CPLR 6501 states that a person whose conveyance or incumbrance is recorded after the filing of the notice of pendency is bound by all proceedings taken in the action after such filing to the same extent as a party. As such, Travitsky’s rights were extinguished by the foreclosure sale, assuming the sale was properly conducted.

    Regarding the conspiracy claim, the Court acknowledged the general allegations of conspiracy might not survive a summary judgment motion without evidentiary support. However, the Court emphasized that the standard for a motion to dismiss based on the pleading’s insufficiency is lower. For the limited purpose of assessing the complaint’s sufficiency, the allegations were deemed adequate to state a cause of action, requiring the reinstatement of the second cause of action.