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Tenancy by the Entirety Extinguished When Both Husband and Wife Convey their Interests to Same Grantee, Who then Conveys His Interest Back to the Husband and Wife

Both the appellant and her husband had separately transferred their interests in property to the same grantee, defendant Feliciano.  Feliciano then mortgaged the property and executed a deed transferring 99% of the property back to appellant and her husband. Feliciano was alleged to have defaulted.  The appellant moved for summary judgment in the foreclosure action contending the tenancy by the entirety, created when she and her husband first bought the property, was never terminated.  In affirming the denial of appellant’s motion to dismiss, the Second Department wrote:

…[W]here a tenancy by the entirety is created, “there is nothing in New York law that prevents one of the co-owners from mortgaging or making an effective conveyance of his or her own interest in the tenancy . . . subject to the continuing rights of the other” …. “[T]he interest acquired by a grantee or mortgagee of such a unilateral conveyance is not denominated a tenancy by the entirety, but rather is labeled a tenancy in common”; however, “the grantee’s or mortgagee’s rights in the property are essentially the same as those possessed by the grantor or mortgagor: a right to shared possession and ownership subject to the original cotenants’ reciprocal rights of survivorship” … .  …[W]here, as here, the interests separately conveyed away by both spouses are unified in a single grantee, the tenancy by the entirety is extinguished by merger, since the sequence in which the grantors die will no longer affect the disposition of title …. “Separate conveyances by each tenant to the same grantee . . . terminate the tenancy by the entirety vesting the entire estate in that grantee” ….   Deutsche Bank Nation Trust Co v Feliciano, et al, 2013 NY Slip Op 02531, 2012-00130, Index No 18752/08, 2nd Dept, 4-17-13

 

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Notice of Tax Foreclosure Proceeding Deemed Sufficient

In finding that the notice requirements in a tax foreclosure proceeding had been met, the Third Department wrote:

Tax foreclosure proceedings enjoy a presumption of regularity, such that “[t]he tax debtor has the burden of affirmatively establishing a jurisdictional defect or invalidity in [such] proceedings” … .  In a tax foreclosure proceeding, each property owner is entitled to personal notice of the proceeding (see RPTL 1125 [1] [a]), which “shall be sent to each . . . party both by certified mail and ordinary first class mail” (RPTL 1125 [1] [b] [i]). Such “notice shall be deemed received unless both the certified mailing and the ordinary first class mailing are returned by the United States postal service within forty-five days after being mailed” … .Here, while the notice sent by certified mail to the Bayonne address was returned, there is no question that the notice sent by ordinary first class mail to respondent … at that address was not returned. Therefore, such notice was deemed received by respondent (see RPTL 1125 [1] [b] [i]…) . Matter of Foreclosure … 514737, 3rd Dept, 4-11-13

 

 

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Remedy When Referee Exceeds Authority

The Second Department explained the effect of a referee’s exceeding his or her authority:

“A referee derives his or her authority from an order of reference by the court” …. The scope of a referee’s duties are defined by the order of reference (see CPLR 4311;…). A referee “who attempts to determine matters not referred to him [or her] by the order of reference acts beyond and in excess of his [or her] jurisdiction” …. Here, the Supreme Court directed the referee to hear and report on the issues of whether the plaintiff complied with the terms of the loan reinstatement agreement …. Instead of making findings of fact and reporting them to the Supreme Court, the referee exceeded his authority by making a determination that the loan should be reinstated … . Since the referee had no authority to do so, the Supreme Court should have rejected his report in its entirety … . Furman v Wells Fargo Home Mtge Inc, 2013 NY Slip Op 02374, 2011-10281, 2011-10284, Index No 25616/09, 2nd Dept, 4-10-13

 

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There Is No Transfer of Property Until the Deed Is Accepted by the Buyer

In a full-fledged opinion by Judge Read, the Court of Appeals determined that a grant of property takes place only when the deed is (1) delivered and (2) accepted.  There was a foreclosure sale.  In order to obtain a judgment for the deficiency between the amount of the foreclosed loan and the actual foreclosure sale price, a motion must be made within 90 days “after the date of the consummation of the sale by the delivery of the proper deed of conveyance to the purchaser…”.  In this case the buyer at the foreclosure sale (M & T) did not at first accept the deed because M & T planned to assign its bid prior to the closing.  The deed was returned to the referee who agreed to hold it.  About three months later, M & T asked the referee to execute and resend the deed. About two weeks after that M & T filed a motion for a deficiency judgment. Defendants opposed the motion arguing it was made more than 90 days after the consummation of the sale. The appellate division agreed with the defendants.  The Court of Appeals reversed and wrote:

As a general rule, a deed is presumed to have been “delivered and accepted at its date”; however, this presumption “must yield to opposing evidence” … . Here, M&T’s attorney twice declined to accept or retain physical possession of the referee’s deed dated May 11, 2010. As a result, the referee took back the deed and other closing documents and ultimately executed a deed on August 9, 2010, when M&T’s attorney accepted it … . This constitutes “opposing evidence” sufficient to rebut any presumption of delivery in May 2010 … . M&T’s motion was therefore timely because brought within 90 days “after the date of the consummation of the sale by the delivery of the proper deed of conveyance to the purchaser” (RPAPL 1371 [2]) — i.e., August 9, 2010.  M & T Real Estate Trust v Doyle, 55, CtApp 3-26-13

 

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Court’s Sua Sponte Dismissal of Complaint Reversed

The Second Department reversed the trial court’s sua sponte dismissal of plaintiff’s mortgage foreclosure complaint.  The trial court dismissed the complaint on the ground that the plaintiff lacked standing and imposed sanctions based on plaintiff’s alleged reliance upon a “robosigner” (according to the trial court’s own Internet research).  On the issues of “sua sponte” dismissal and standing, the Second Department wrote:

The Supreme Court abused its discretion in, sua sponte, directing dismissal of the complaint with prejudice and cancellation of the notice of pendency … . “A court’s power to dismiss a complaint, sua sponte, is to be used sparingly and only when extraordinary circumstances exist to warrant dismissal” … . Here, the Supreme Court was not presented with any extraordinary circumstances warranting sua sponte dismissal of the complaint. Moreover, as the defendants failed to answer the complaint and did not make pre-answer motions to dismiss the complaint, they waived the defense of lack of standing … . Furthermore, a party’s lack of standing does not constitute a jurisdictional defect and does not warrant sua sponte dismissal of a complaint by the court … .  HSBC Bank USA, NA v Taher, 2013 NY Slip Op 01806, 2011-06455, 2012-00841, Index No 9320/09, 2nd Dept. 3-20-13

 

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Lack of Standing Argument Waived

In this foreclosure action, the Third Department determined failure to raise plaintiff’s lack of standing in either the answer or the pre-answer motion to dismiss the complaint constituted a waiver of the defendant’s standing argument.  HSBC Bank USA v Ashley, 513730, Third Dept. 3-7-13

 

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Erroneous Discharge of Mortgage Can Be Set Aside Where No Detrimental Reliance

The Second Department explained: “ ‘ A mortgagee may have an erroneous discharge of mortgage, without concomitant satisfaction of the underlying mortgage debt, set aside, and have the mortgage reinstated where there has not been detrimental reliance on the erroneous recording’ … .Only bona fide purchasers and lenders for value are entitled to protection from an erroneous discharge of a mortgage based upon their detrimental reliance thereon.”  Beltway Capital, LLC v Soleil,et al, 2011-02773, Index no 22244/07, Second Dept. 3-6-13

 

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