The First Department determined a deed which was security for a debt constituted a mortgage. Therefore, foreclosure proceedings under the Real Property Law were triggered by default on the debt:
Real Property Law § 320 codifies the common-law principle that the giving of a deed to secure a debt, in whatever form and however structured, creates nothing more than a mortgage … . “The courts are steadfast in holding that a conveyance, whatever its form, if in fact given to secure a debt, is neither an absolute nor a conditional sale, but a mortgage, and that the grantor and grantee have merely the rights and are subject only to the obligations of mortgagor and mortgagee” … . “Significantly, the statute does not require a conclusive showing that the transfer was intended as security; it is sufficient that the conveyance appears to be intended only as a security in the nature of a mortgage” … . “In determining whether a deed was intended as security, examination may be made not only of the deed and a written agreement executed at the same time, but also of oral testimony bearing on the intent of the parties and to a consideration of the surrounding circumstances and acts of the parties” … . Patmos Fifth Real Estate Inc. v Mazl Bldg., LLC, 2016 NY Slip Op 04804, 1st Dept 6-16-16
REAL PROPERTY LAW (DEED PROVIDED AS SECURITY FOR A DEBT CONSTITUTES A MORTGAGE TRIGGERING THE NEED FOR FORECLOSURE PROCEEDINGS UPON DEFAULT)/FORECLOSURE (DEED PROVIDED AS SECURITY FOR A DEBT CONSTITUTES A MORTGAGE TRIGGERING THE NEED FOR FORECLOSURE PROCEEDINGS UPON DEFAULT)/DEEDS (DEED PROVIDED AS SECURITY FOR A DEBT CONSTITUTES A MORTGAGE TRIGGERING THE NEED FOR FORECLOSURE PROCEEDINGS UPON DEFAULT)/MORTGAGES (DEED PROVIDED AS SECURITY FOR A DEBT CONSTITUTES A MORTGAGE TRIGGERING THE NEED FOR FORECLOSURE PROCEEDINGS UPON DEFAULT)