New York Law Review

Tag: Tender

  • Rondack Construction Services, Inc. v. Kaatsbaan International Dance Center, Inc., 11 N.Y.3d 580 (2008): Tender Before Judicial Sale Discharges Execution Lien

    11 N.Y.3d 580 (2008)

    A judgment debtor’s tender to the sheriff, before its property is auctioned at a judicial sale, automatically discharges the execution lien, terminating the sheriff’s authority to sell the property.

    Summary

    Rondack Construction obtained a judgment against Kaatsbaan, and sought to execute on Kaatsbaan’s property. Before the auction began, Kaatsbaan offered a cashier’s check to the sheriff’s department for the full amount of the judgment, interest, and fees. The sheriff refused the tender and proceeded with the sale. Kaatsbaan moved to vacate the sale. The New York Court of Appeals held that Kaatsbaan’s pre-sale tender discharged the execution lien, reaffirming the principle established in Tiffany v. St. John. The sheriff, therefore, lacked the authority to sell the property, and the sale was invalid. The Court found that the relevant CPLR provisions did not abrogate the common-law rule allowing for discharge of the lien via pre-sale tender.

    Facts

    Rondack Construction Services, Inc. obtained a default judgment against Kaatsbaan International Dance Center, Inc. for $105,631.05. When Kaatsbaan did not satisfy the judgment, Rondack directed the Dutchess County Sheriff to sell a 53-acre parcel owned by Kaatsbaan. The Sheriff scheduled a judicial auction and sale of the property for September 6, 2006. Before bidding began, Kaatsbaan’s executive director inquired whether the sale could be prevented by satisfying the judgment with a check. Kaatsbaan’s agent offered a cashier’s check for $116,754.15, sufficient to cover the judgment, interest, and fees. The Sheriff, after receiving instructions from the County Attorney’s office, refused the tender and proceeded with the sale. TBays, LLC made the highest bid of $118,000.

    Procedural History

    Kaatsbaan moved to vacate the sale and compel the Sheriff to accept its check. TBays cross-moved to direct the Sheriff to execute and deliver the deed. Supreme Court denied Kaatsbaan’s motion and granted TBays’ cross motion. The Appellate Division reversed, granting Kaatsbaan’s motion, relying on Tiffany v. St. John. The Appellate Division granted leave to appeal to the Court of Appeals and certified the question of whether its decision was properly made.

    Issue(s)

    Whether a judgment debtor’s tender to the sheriff, before its property is auctioned at a judicial sale, of an amount sufficient to satisfy the judgment, interest, poundage, and related fees, automatically discharges the execution lien, thereby terminating the sheriff’s authority to sell the property.

    Holding

    Yes, because a judgment debtor’s tender to the sheriff before the judicial sale automatically discharges the execution lien, terminating the sheriff’s authority to sell the property.

    Court’s Reasoning

    The Court of Appeals reaffirmed Tiffany v. St. John, which held that a pre-sale tender of the full amount due is equivalent to payment and has the “instantaneous effect” of discharging the lien created by the execution. TBays argued that CPLR article 52, specifically CPLR 5236 and 5240, abrogated the common-law rule in Tiffany. The Court disagreed, stating that CPLR 5236, while abolishing the statutory right to redeem property *after* a judicial sale, did not alter the right to recover property *before* a sale. The Court noted that CPLR 5236(a) even preserves “a kind of ‘redemption’ period” by requiring an eight-week timeframe between notice and sale. The Court stated that Tiffany, permitting redemption by tendering full payment before the auction, is fully compatible with CPLR 5236.

    Regarding CPLR 5240, which allows courts to issue protective orders, the Court stated that nothing in this provision explicitly or implicitly supplants Tiffany. The Court emphasized that property owners possess a common-law right under Tiffany to redeem their property before sale without judicial intervention. The Court quoted Guardian Loan Co. v. Early, noting CPLR 5240 “grants the courts broad discretionary power to control and regulate the enforcement of a money judgment under article 52 to prevent unreasonable annoyance, expense, embarrassment, disadvantage, or other prejudice to any person or the courts.”

    The Court found that Kaatsbaan, like the debtor in Tiffany, timely tendered an amount sufficient to satisfy the judgment and all fees and expenses, extinguishing the lien and precluding the sale. Therefore, the Appellate Division properly granted Kaatsbaan’s motion.

  • 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.

  • Riverside Syndicate, Inc. v. Munroe, 10 N.Y.2d 478 (1962): Enforceability of Mortgage Release Clause

    Riverside Syndicate, Inc. v. Munroe, 10 N.Y.2d 18 (1961)

    A mortgagor seeking to enforce a release clause in a mortgage agreement after the mortgagee’s initial refusal must keep their offer to pay for the releases open and available, or lose the right to specific performance.

    Summary

    This case concerns a dispute over a mortgage agreement containing a clause allowing the mortgagor to obtain releases of individual lots upon payment of a specified sum. The mortgagor, Dade, attempted to pay for the release of several lots, but the mortgagee, Riverside Syndicate, refused, allegedly demanding a larger sum than agreed upon. Dade argued that Riverside’s breach of the release clause extinguished the mortgage lien on those lots. The court held that while Riverside breached the agreement, Dade was not entitled to a windfall and had to keep its offer to pay open to be entitled to equitable relief. Failure to do so meant the mortgage remained in effect.

    Facts

    Riverside Syndicate held a mortgage on land owned by Dade. The mortgage agreement contained a clause that allowed Dade to obtain a release of individual lots from the mortgage lien by paying $2,000 per lot upon sale or encumbrance. On November 27, 1968, Dade notified Riverside that it was ready to pay $42,000 for the release of 21 specified lots and tendered a check for that amount. Riverside refused to accept the payment and execute the releases.

    Procedural History

    Riverside brought a foreclosure action against Dade. The Special Term found that Riverside had breached the agreement by refusing to accept the $2,000 per lot and denied foreclosure on the 21 lots in question. The Appellate Division reversed, finding that Dade had not made a proper tender of payment. The Court of Appeals then reviewed the Appellate Division’s decision.

    Issue(s)

    1. Whether Riverside breached the mortgage agreement by refusing to release the lots upon Dade’s offer to pay the agreed-upon amount.
    2. Whether Dade’s failure to keep the offer to pay open after Riverside’s initial refusal precluded it from obtaining equitable relief (i.e., release of the mortgage lien).

    Holding

    1. Yes, because Riverside’s refusal to accept the $2,000 per lot and execute the releases, based on a desire for more money, constituted a breach of the mortgage agreement.
    2. Yes, because to obtain equitable relief, Dade was required to keep its offer to pay open after Riverside’s initial refusal.

    Court’s Reasoning

    The court found that Riverside’s refusal to execute the releases was not based on a legitimate concern about a sale but on a desire to extract more money from Dade, which constituted a breach of the agreement. The court noted that the strict rules of tender are not applicable in this situation, as Dade made a sufficient offer of performance to prevent Riverside from relying on the defense that a check was not physically presented.

    However, the court also held that Dade was not entitled to a windfall. Citing Werner v. Tuch, the court emphasized that a tender on which equitable relief turns must be kept good. Since Dade did not continue to hold the funds available for Riverside, it was not entitled to have the mortgage lien on the lots removed. To remedy the situation, the Court of Appeals ordered that Dade be given the opportunity to pay the $42,000 plus accrued interest and taxes into the court. If Dade complied, the foreclosure action would be dismissed; otherwise, the original judgment in Riverside’s favor would stand. The court reasoned that this outcome placed the parties in the position they were in when the offer was initially made and refused. The court observed, “It would be inequitable to allow the defendant, having made an effort to perform a condition on which plaintiffs had an affirmative obligation but which they did not accept, to sit by thereafter on this past event and gain the remarkable consequence that the lien on 21 lots was gone and a $42,000 windfall had dropped down to defendant as mortgagor.”