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​ IN THIS FORECLOSURE ACTION, THE BANK FAILED TO PROVE DEFENDANT’S DEFAULT (EVIDENCE SUBMITTED IN REPLY NOT CONSIDERED) AND THE BANK FAILED TO DEMONSTRATE IT NOTIFIED A TENANT OF THE FORECLOSURE AS REQUIRED BY RPAPL 1303 (SECOND DEPT). ​

The Second Department, reversing Supreme Court, determined plaintiff bank (Merrill Lynch) in this foreclosure action failed to prove defendant’s default and failed to notify a tenant on the property of the foreclosure. The bank’s attempt to prove the default in reply papers was rejected:

Merrill Lynch failed to submit admissible evidence establishing the defendant’s default. In support of its motion, Merrill Lynch submitted, inter alia, the affidavit of Theresia Ang, the vice president of its loan servicer and attorney-in-fact. However, Ang failed to attach the business records on which she relied, and thus, her averment to the defendant’s default was hearsay lacking in probative value … . Although Merrill Lynch attempted to submit evidence of the defendant’s default in reply, a moving party “cannot meet its prima facie burden by submitting evidence for the first time in reply” … .

… RPAPL 1303 requires, inter alia, the party foreclosing a mortgage on residential property to provide the notice prescribed by the statute to any tenant of the property by certified mail, if the identity of the tenant is known to the foreclosing party (see id. § 1303[1][b]; [4]). Proper service of an RPAPL 1303 notice is a condition precedent to commencing a foreclosure action, and the “‘foreclosing party has the burden of showing compliance therewith'” … .

Here, Merrill Lynch failed to submit any evidence that it served any tenant of the subject property with the notices required by RPAPL 1303 by certified mail, or that it was not aware of any tenant’s identity. In contrast, the defendant’s affidavit and the affidavit of Richard Nicholson, submitted in opposition to Merrill Lynch’s motion, established that Richard Nicholson resided at the subject property, that he paid rent, and that the mortgage loan servicer was aware that he resided at the subject property. Merrill Lynch Credit Corp. v Nicholson, 2022 NY Slip Op 06239, Second Dept 11-9-22

Practice Point: The bank in this foreclosure action failed to submit sufficient evidence of defendant’s default and was not allowed to cure the defect in reply papers.

Practice Point: The bank in this foreclosure action did not demonstrate it notified a tenant of the foreclosure as required by RPAPL 1303.

 

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