You are here: / / Foreclosure On Both Junior and Senior Mortgages May Result in Unjust Enrichment...

Foreclosure On Both Junior and Senior Mortgages May Result in Unjust Enrichment If the Two Obligations Amount to More than the Fair Market Value

The Third Department explained the “unjust enrichment” issues raised when a party holds two mortgages on the same property, forecloses on the junior mortgage, purchases the property at the foreclosure sale, and then sues on the senior mortgage:

Where, as here, a holder of two mortgages forecloses on the junior mortgage and purchases the property, the question of whether the senior obligation is recoverable is a matter of equity dependent upon the facts and circumstances of the case (see Restatement [Third] of Property § 8.5, Comment c [2]…).  When the sale price and the outstanding amount owed on the senior obligation together equal the fair market value of the property, the land is considered to satisfy the debt.  In that case, equity will prevent the mortgagee from suing on the senior obligation and thus receiving a windfall (see Restatement [Third] of Property § 8.5, Comment c [2]…).

If, however, the fair market value of the property is less than the sum of the two obligations, “the mortgagor would be unjustly enriched if the mortgagee is prevented from recovering on the senior obligation” (Restatement [Third] of Property § 8.5, Comment c [2]).  In such a situation “the mortgagee may recover on the senior obligation only the amount by which the sum of the junior and senior obligations exceed the fair market value of the land” (Restatement [Third] of Property § 8.5, Comment c [2]). Here, neither party submitted proof as to the fair market value of the property, and Supreme Court thus had no basis to determine the amount recoverable on the senior note.  We remit for that purpose.  TD Bank NA… v Dunbar Tower LLC, 516770, 3rd Dept 12-12-13

 

You might also like
Election Poll Worker Not an Employee—Not Entitled to Unemployment Insurance Benefits
Benefits Awarded for Psychic Injury (Stress) Affirmed
Summary Judgment Properly Awarded in Derivative Child-Neglect Proceeding
COLLATERAL ESTOPPEL APPLIED TO THE OFFICE FOR PEOPLE WITH DEVELOPMENTAL DISABILITIES’ (OPWDD’S) ARBITRATION PROCEEDINGS WHICH FOUND PETITIONER WAS NOT GUILTY OF SUPPLYING MARIJUANA TO A RESIDENT OF A GROUP HOME FOR PERSONS WITH DEVELOPMENTAL DISABILITIES, THE SUBSEQUENT PROCEEDINGS BY THE JUSTICE CENTER FOR THE PROTECTION OF PEOPLE WITH SPECIAL NEEDS WERE BOUND BY THE FINDINGS OF THE OPWDD ARBITRATION (THIRD DEPT).
PLEA COLLOQUY RAISED QUESTIONS ABOUT DEFENDANT’S MENTAL HEALTH, NARROW EXCEPTION TO PRESERVATION REQUIREMENT ALLOWED ISSUE TO BE HEARD ON APPEAL, PLEA VACATED (THIRD DEPT).
Question of Fact Whether Hospital Vicariously Liable for Actions of Non-Employees
Code Provision Requiring Issuance of Rental Certificate by City Prior to Leasing an Apartment Deemed Constitutional
MANNER IN WHICH DECORATIONS WERE STACKED IN A STORE DID NOT PRESENT A FORESEEABLE RISK, RES IPSA LOQUITUR DOCTRINE DID NOT APPLY (THIRD DEPT).

Categories

Sign Up for the Mailing List to Be Notified When the Site Is Updated.

  • This field is for validation purposes and should be left unchanged.

Copyright © 2026 New York Appellate Digest, Inc.
Site by CurlyHost | Privacy Policy

Itemization of Mechanic’s Lien Not Necessary/Contract Adequately Apprised... Snow Removal Contractor May Be Liable to Plaintiff in Slip and Fall Action/Question...