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
Prevailing Wage Law Not Preempted by Federal Telecommunications Act or Labor Relations Act
Claimant’s Failure to Give Timely Written Notice of Injury Excused
VERDICT FINDING THE SCHOOL DISTRICT WAS NEGLIGENT BUT FURTHER FINDING THE NEGLIGENCE WAS NOT THE PROXIMATE CAUSE OF THE STUDENT’S SUICIDE WAS NOT AGAINST THE WEIGHT OF EVIDENCE; PLAINTIFFS ALLEGED BULLYING AT SCHOOL CAUSED THEIR SON’S SUICIDE (THIRD DEPT).
THE ICY CONDITION WAS CREATED BY “POCKETS OF FREEZING RAIN” FROM MIDNIGHT TO 3:45 AM; THERE WAS NO “STORM;” THE “STORM-IN-PROGRESS” DOCTRINE SHOULD NOT HAVE BEEN APPLIED IN THIS SLIP AND FALL CASE (THIRD DEPT).
PLAINTIFF’S EXPERT DID NOT RAISE A QUESTION OF FACT IN THIS MEDICAL MALPRACTICE ACTION.
PETITIONER’S PISTOL PERMIT WAS NOT REVOKED FOR DOMESTIC VIOLENCE; THEREFORE THE FACT THAT THE PERMIT HAD BEEN REVOKED IN THE PAST, STANDING ALONE, WAS NOT “GOOD CAUSE” FOR DENIAL OF THE INSTANT PETITION FOR REINSTATEMENT OF THE PERMIT; MATTER REMITTED (THIRD DEPT).
PLAINTIFF ALLEGED HE WAS PUNCHED IN THE FACE BY A BAR EMPLOYEE AND SUED THE BAR FOR BREACH OF A DUTY TO KEEP THE PREMISES SAFE, WHICH WAS PROPERLY DISMISSED AS UNTIMELY, NEGLIGENT HIRING AND SUPERVISION, WHICH SHOULD NOT HAVE BEEN DISMISSED, AND VICARIOUS LIABILITY, WHICH ALTHOUGH INCONSISTENT WITH NEGLIGENT SUPERVISION, CAN BE PLED IN THE ALTERNATIVE (THIRD DEPT).
PLAINTIFF WAS SEVERELY INJURED IN A FORKLIFT ACCIDENT AND BROUGHT THIS ACTION ALLEGING DEFECTIVE DESIGN; THERE WAS A DEFENSE VERDICT WHICH WAS REVERSED BECAUSE SOME EXPERT TESTIMONY SHOULD NOT HAVE BEEN ADMITTED AND SOME EXPERT TESTIMONY SHOULD NOT HAVE BEEN STRUCK (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...