Real Property Law Section Blog

An Action was commenced to foreclose a mortgage, securing a thirty year note with an interest rate of 9 ½ percent, on the Defendant's home in a minority neighborhood. Judge Kramer of the Supreme Court, Kings County, had held on December 6, 2007 that the burden was on the Defendant to demonstrate that she was the victim of discriminatory lending. However, in this ruling, Judge Kramer held that "a mortgage granted to a minority buyer for the purchase of property in a minority area which carries an interest rate that exceeds nine percent [which he concluded is a "higher priced loan" under the federal Home Mortgage Disclosure Act's standards, for this mortgage and most other thirty year mortgages written after 2000] creates a rebuttable presumption of discriminatory practice" and the foreclosing lender "must demonstrate by a fair preponderance of the evidence that the mortgage was not the product of unlawful discrimination. If the lender is unable to do so, the foreclosure proceeding will be dismissed and the lender left to its remedies at law". The Court further stayed the proceedings since the Defendant is on active military duty and her attorney had asked to be relieved. M&T Mortgage Corp. v. Foy, decided May 1, 2008, is reported at 2008 WL 1915125.

The Defendant-homeowner brought a motion, pro se, for an Order vacating a judgment of foreclosure and sale and barring any attempt to sell her home. She alleged that the Plaintiff engaged in "predatory lending" under New York's Banking Law Section 6-l ("High-cost home loans"). Judge Palmieri of the Supreme Court, Nassau County, denied the motion and vacated the temporary stay that had been entered. The two mortgage loans being foreclosed were not "high cost" loans under the Banking Law; no proof was submitted that there was either fraud or a failure to disclose the loans' terms. Nor was proof submitted that the Defendant was protected by the Home Ownership and Equity Protection Act of 1994 (15 USC Section 1639). According to the Court, "…absent the violation of some statute or other relevant legal principle the law does not permit judges to simply ignore payment obligations voluntarily taken on by mortgagors even if it should have been evident to both lender and borrower that the loan was likely beyond the borrower's ability to repay". Alliance Mortgage Banking Corp. v. Dobkin, decided March 28, 2008, is reported at 2008 WL 1758864.

Under Bankruptcy Code Section 1146(a), "[t]he issuance, transfer, or exchange of a security, or the making or delivery of an instrument of transfer under a plan confirmed under section 1129 of this title, may not be taxed under any law imposing a stamp tax or similar tax". The United States Supreme Court, in a decision issued June 16, 2008, reversing the Eleventh Circuit Court of Appeals, held that the 1146(a) exemption from stamp taxes only applies to a transfer made by a Debtor in bankruptcy after confirmation of a plan of reorganization. In the case under review, the sale on March 16, 2004 of substantially all of the Debtor's assets under Code Section 363(b)(1) was made under a Bankruptcy Court Order providing that the transfer was exempt from Florida stamp taxes. The Chapter 11 Plan was filed on March 26, 2004, amended on July 31, 2004 and confirmed by the Bankruptcy Court on October 21, 2004. Before the plan of reorganization was confirmed, the State of Florida filed an objection, seeking the payment of State stamp taxes since the transfer was not "under a plan confirmed". The Bankruptcy Court held that the sale was exempt from Florida's stamp tax because the transfer was necessary to consummate the plan, and the Court of Appeals for the Eleventh Circuit affirmed that ruling. Florida Department of Revenue v. Piccadilly Cafeterias, Inc. is reported at 2008 WL 2404077.

The Appellate Division [1st. Dept.] held that a genuine issue of material fact existed as to whether a purchaser, with a right under a due diligence provision to "cancel a contract for any reason" is required to give a reason for canceling. The court held that the cancellation right was "rationally tied" to the right of inspection and did not necessarily give the purchaser the right to cancel without any reason.

Should we be amending our contracts to provide for purchaser's right to cancel with or without cause during a due diligence contingency period?

Schwartz v Cilmi & Associates 41 A.D.3d 317 839 N.Y.S.2d 55 [June 26, 2007]

Posted on behalf of ABRAHAM B. KRIEGER, ESQ.
Meyer, Suozzi, English & Klein, P.C.
990 Stewart Avenue, Suite 300
Garden City, New York 11530-9194

Under Civil Practice Law and Rules ("CPLR") Section 5203 ("Priorities and liens upon real property"), a judgment is a lien for ten years on real property of the debtor in the county in which the judgment is docketed. The judgment may be renewed for an additional ten years pursuant to CPLR Section 5014 ("Action upon judgment"), which provides that "[a]n action may be commenced…during the year prior to the expiration of ten years since the first docketing of the judgment. The judgment in such an action shall be designated a renewal judgment. The lien of a renewal judgment shall take effect upon the expiration of ten years from the first docketing of the original judgment".

In a case decided by the Appellate Division, First Department, the Plaintiff's judgment was docketed in New York County on October 23, 1991. Before the ten year lien period expired, the judgment creditor brought an action to obtain a renewal judgment. An Order renewing the judgment nunc pro tunc dated as of October 23, 2001 was docketed in 2005. In 2003, however, after the ten year lien period for the judgment had run and before the renewal judgment was docketed, the judgment debtor executed two mortgages on a condominium unit he owned in Manhattan. The mortgagees sought an order either vacating the nunc pro tunc treatment of the renewal judgment or declaring that the liens of their mortgages were prior to the lien of the renewal judgment. The Supreme Court, New York County, denied their petition, and the mortgagees appealed.

The Appellate Division reversed the Order of the lower court, granted the petition, held that the renewal judgment was entered as of the date it was granted, and declared that the liens of the mortgages were prior to the judgment. According to the Court, "[o]nce the county docket book reflected only [the judgment debtor's] expired lien, other creditors were fully entitled to rely upon that fact and make mortgage liens on the assumption that their mortgage liens would have priority". Gletzer v. Harris, decided March 13, 2008, is reported at 2008 WL 678589.

Absent an agreement to the contrary, a partnership dissolves on the death of a partner and the partnership, if it continues to do business, does so as a partnership at will. The Plaintiffs, heirs of general partners of two partnerships owning real property, claimed that they became partners with the other, surviving partners, and they brought an action to enforce their partnership rights. The Supreme Court, New York County, held that the Plaintiffs had only beneficial interests in partnerships at will; they were not partners because there was no agreement under which the Plaintiffs succeeded to the partnership interests. They only have the right to collect earnings, to a declaration of dissolution, and to an accounting. Sperber v. Rubell, decided February 27, 2008, was reported in the New York Law Journal on March 21, 2008.

Under Local Law No. 29 of 2007 effective November 11, 2007, adding article ten to subchapter five of chapter two of title twenty-seven of the Administrative Code, the Department of Housing Preservation and Development ("HPD") will annually identify 200 "distressed buildings" for the AEP. After receipt of notice that a property is included in the AEP, the property owner has four months to correct 100% of the violations directly related to providing heat and hot water and no less than 80% of all Class "B" and "C" violations, to pay all outstanding charges for emergency repairs performed by HPD, and to submit to HPD a current and valid property registration statement. If the owner does not comply, HPD may hire a contractor and bill the owner for the repairs. Administrative Code Section 27-2153(q) provides that "[a]ll amounts for expenses incurred and fees imposed by the department pursuant to this article that remain unpaid by an owner shall constitute a debt recoverable from the owner and a lien upon the building and lot, and upon the rents and other income thereof". Information on this new program is posted at http://home2.nyc.gov/html/hpd/html/owners/aep.shtml

At a meeting today with a committee of the New York State Land Title Association, the City Register announced a new policy for the return of original recorded documents. This policy will be in effect for all documents submitted for recording after June 1, 2008, including all documents rejected prior to that date which are re-submitted for recording after June 1.

It has been the practice of the City Register's offices to return all recorded documents by mail that are not picked-up by the company which submitted them, or by its designee, without further charge.

A document submitted for recording (or re-recording) after June 1 that is not picked-up within ten business days of recording will be returned to the person noted on the ACRIS Recording and Endorsement Cover Page as the addressee for the return of the document only if the Register's Office is provided when the document is submitted either (i) a stamped, addressed return envelope or (ii) an overnight delivery service envelope with a label (such as a Federal Express "US Airbill") completed with the address of the recipient and a billing account number.

Otherwise, after ten business days from the date of its recording, the original recorded document will be destroyed by the Register's Office.

The City Register's office is responsible for real property recordings in all counties of the City of New York other than Richmond County (Staten Island).

A recent decision by the Appellate Division, Second Department, expands the scope of matters in which a lis pendens may be filed to include cases where it is alleged a judgment debtor is attempting to fraudulently convey property in anticipation of an imminent judgment . "The plaintiffs allege in their complaint, in relevant part, that defendants, in anticipation of an imminent judgment against them and with the intent to defraud their creditors, conveyed certain real property to related corporate entities, without adequate consideration, thereby rendering themselves insolvent ... Under the circumstances, the Supreme Court erred in determining that this action was not one in which a notice of pendency may be filed" (citations omitted).).

See Ford Motor Co. v. Shayovitz, 36 A.D.3d 754, 828 N.Y.S.2d 539 (2d Dep't 2007)

Submitted by Abraham B. Krieger, Esq.
Meyer, Suozzi, English & Klein, P.C.
Garden City, New York

Property owners whose homes and businesses in downtown Brooklyn are to be condemned to enable the construction of the Atlantic Yards Arena and Redevelopment Project claimed that the taking would violate the Public Use Clause of the Fifth Amendment to the United States Constitution, under which "private property [shall not] be taken for public use, without just compensation". They alleged that the public uses advanced for the Project were pretexts for a private taking. The Second Circuit Court of Appeals has affirmed the District Court for the Eastern District of New York's Order dismissing the complaint. According to the Appellate Court, "the Project bears at least a rational relationship to well established categories of public uses, among them the redress of blight, the creation of affordable housing, the creation of a public open space, and various mass-transit improvements". The Supreme Court's decision in Kelo v. City of New London (545 U.S. 469) does not "require federal courts in all cases to give close scrutiny to the mechanics of a taking rationally related to a classic public use as a means to gauge the purity of the motives of the various governmental officials who approved it". Goldstein v. Pataki, decided February 1, 2008, is reported at 2008 WL 269100.