Real Property Actions and Proceedings Law (RPAPL) – Page 5

THE FORECLOSURE ABUSE PREVENTION ACT (FAPA) APPLIES RETROACTIVELY; THE DEFENDANT MORTGAGE COMPANY IS ESTOPPED BY CPLR 213(4)(A) FROM ASSERTING THE STATUTE OF LIMITATIONS FOR A FORECLOSURE HAS NOT EXPIRED; PLAINTIFF’S COMPLAINT SEEKING DISCHARGE AND CANCELLATION OF THE MORTGAGE SHOULD NOT HAVE BEEN DISMISSED (FIRST DEPT).

The First Department, reversing Supreme Court, in a full-fledged opinion by Justice Higgitt, determined (1) the Foreclosure Abuse Prevention Act (FAPA) applies retroactively; and (2) because the defendant mortgage company is estopped by CPLR 213(4)(b) from asserting the six-year statute of limitations for foreclosure had not expired, plaintiff’s RPAPL 1501(4) complaint (seeking cancellation and discharge of the mortgage) should not have been dismissed:

Having concluded that FAPA applies retroactively, we must next consider whether defendant is estopped under CPLR 213(4)(b) from asserting that the statute [*6]of limitations for the commencement of a mortgage foreclosure action has not expired because the debt secured by the mortgage was not validly accelerated in connection with the prior foreclosure action. CPLR 213(4)(b)’s potent estoppel bar will not be imposed, and a defendant will be free to assert that the debt secured by the mortgage was not validly accelerated in connection with a prior action, if, and only if, the prior action was dismissed based on an express judicial determination, made upon a timely interposed defense, that the instrument was not validly accelerated.

Here, defendant is estopped from asserting that the statute of limitations on a cause of action to foreclose on the mortgage has not expired. An action to foreclose on the mortgage was previously commenced and dismissed. Defendant is not saved by the limited exception afforded by CPLR 213(4)(b) because Supreme Court, in dismissing the foreclosure action, did not make an express determination that the debt secured by the mortgage was not validly accelerated. Rather, the court dismissed the foreclosure action on the ground that the court lacked personal jurisdiction over the defendants therein … . Genovese v Nationstar Mtge. LLC, 2023 NY Slip Op 06477, First Dept 12-19-23

Practice Point: The Foreclosure Abuse Prevention Act (FAPA) applies retroactively. Here the defendant mortgage company was estopped by CPLR 214(4)(b) from asserting the six-year statute of limitations for a foreclosure action had not expired.

December 19, 2023

Civil Procedure, Real Property Actions and Proceedings Law (RPAPL)

THE RIGHT TO SEEK REMOVAL OF A CLOUD ON TITLE IS NEVER BARRED BY A STATUTE OF LIMITATIONS (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined the causes of action which sought to remove a cloud on title should not have been dismissed as time-barred because the right to that relief is never barred by a statute of limitations:

Supreme Court erred in granting those branches of the defendants’ motion which were pursuant to CPLR 3211(a)(5) to dismiss as time-barred the first and second causes of action, which sought to set aside and cancel, as null and void, the two mortgages held by the defendants. The Trust, as the alleged owner of the subject property, is “presumptively entitled to possession” … , and the first and second causes of action seek to remove the cloud on title resulting from the allegedly fraudulent mortgages. “[W]here a plaintiff seeks to remove a cloud on title, the right to such relief ‘is never barred by the Statute of Limitations. It is a continuing right which exists as long as there is an occasion for its exercise'” … . Mostafa v Pension Solutions, LLC, 2023 NY Slip Op 06134, Second Dept 11-29-30

Practice Point: The right to seek removal of a cloud on title is never barred by a statute of limitations.

November 29, 2023

Real Property Actions and Proceedings Law (RPAPL), Real Property Law

A DEEDED EASEMENT CAN ONLY BE CREATED WHEN THE GRANTOR OWNS THE DOMINANT AND SERVIENT PROPERTY; HERE THE CRITERIA FOR A DEEDED EASEMENT WERE NOT MET; BUT THE CRITERIA FOR A PRESCRIPTIVE EASEMENT WERE MET (SECOND DEPT).

The Second Department, reversing Supreme Court, determined plaintiffs did not demonstrate they had a deeded easement over the disputed land, but did demonstrate they had a prescriptive easement, although the extent of the easement must be determined at trial:

“An easement is not a personal right of the landowner but is an appurtenance to the land benefitted by it . . . and a grant of the land carries with it the grant of the easement” … . “An easement appurtenant occurs when [an] easement is created in writing, subscribed by the creator, and burdens the servient estate for the benefit of the dominant estate” … . However, “[t]he long-accepted rule in this State holds that a deed with a reservation or exception by the grantor in favor of a third party, a so called ‘stranger to the deed,’ does not create a valid interest in favor of that third party” … . Thus, “[f]or an easement by grant to be effective, the dominant and servient properties must have a common grantor” … .

Here, the defendant made a prima facie showing of his entitlement to judgment as a matter of law declaring that the plaintiffs do not have a deeded easement over the disputed area by “establishing that, at the time the easement was purportedly created, the grantor owned the servient property, but not the dominant property … . * * *

… [P]laintiffs established … their predecessors in interest acquired an easement by prescription over the disputed area, which easement ran with the land when the plaintiffs purchased the property in 2018 … . Notably, the defendant learned of the purported deeded easement in 2005 and assumed that it was valid until at least July 2019. Therefore, the defendant’s relationship to the dominant estate’s use of the driveway area was one of acquiescence, rather than permission … . … Supreme Court erred in denying that branch of the plaintiffs’ cross-motion which was for summary judgment declaring that they have a prescriptive easement over the disputed area. Daniello v Wagner, 2023 NY Slip Op 06116, Second Dept 11-29-23

Practice Point: The criteria for a deeded easement and a prescriptive easement are clearly explained.

November 29, 2023

Civil Procedure, Foreclosure, Real Property Actions and Proceedings Law (RPAPL)

THE 90-DAY TIME-LIMIT IN RPAPL 1371 FOR BRINGING A MOTION FOR A DEFICIENCY JUDGMENT AGAINST THE PURCHASER OF PROPERTY AT A FORECLOSURE SALE FUNCTIONS AS A STATUTE OF LIMITATIONS; THE MOTION HERE WAS UNTIMELY (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the mortgagor’s order to show cause seeking a deficiency judgment against defendant, the purchaser of the property at the foreclosure sale, should have been dismissed as untimely pursuant to RPAPL 1371:

RPAPL 1371(2) states that “[s]imultaneously with the making of a motion for an order confirming the sale, provided such motion is made within ninety days after the date of the consummation of the sale by the delivery of the proper deed of conveyance to the purchaser, the party to whom such residue shall be owing may make a motion in the action for leave to enter a deficiency judgment upon notice to the party against whom such judgment is sought or the attorney who shall have appeared for such party in such action.” “The courts have uniformly treated the 90-day period contained in RPAPL 1371(2) as a provision in the nature of a statute of limitations, so that the plaintiff’s failure to serve notice within the 90-day period is a complete bar to the entry of a deficiency judgment, and the proceeds of the sale will be deemed to be in full satisfaction of the mortgage debt” … . JDRMDBP-SM, LLC v Hossain, 2023 NY Slip Op 06033, Second Dept 11-22-23

Practice Point: The 90-day time-limit in RPAPL 1371 for bringing a motion for a deficiency judgment against the purchaser of property at a foreclosure sale functions as a statute of limitations. A late motion must be dismissed.

November 22, 2023

Civil Procedure, Real Property Actions and Proceedings Law (RPAPL)

US BANK AS THE CURRENT ASSIGNEE OF THE MORTGAGE SHOULD HAVE BEEN ALLOWED TO INTERVENE IN THIS ACTION TO DISCHARGE AND CANCEL THE MORTGAGE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined US Bank, the current assignee of the mortgage, should have been allowed to intervene in this action to cancel and discharge the mortgage pursuant to RPAPL 1501(4):

“Upon a timely motion, a person is permitted to intervene as of right in an action involving the disposition of property where that person may be adversely affected by the judgment” (… see CPLR 1012[a][3]). Additionally, “a court, in its discretion, may permit a person to intervene, inter alia, when the person’s claim or defense and the main action have a common question of law or fact” (… see CPLR 1013). “Whether intervention is sought as a matter of right under CPLR 1012(a), or as a matter of discretion under CPLR 1013, is of little practical significance since a timely motion for leave to intervene should be granted, in either event, where the intervenor has a real and substantial interest in the outcome of the proceedings” … .

Here, in support of its motion, U.S. Bank submitted evidence demonstrating, among other things, that it took possession of the note in June 2018, prior to the commencement of this action, and that it was the current assignee of the mortgage. Under the circumstances, U.S. Bank’s submissions were sufficient to demonstrate that it had a real and substantial interest in the outcome of this action … . Maggi v U.S. Bank Trust, N.A., 2023 NY Slip Op 05600, Second Dept 11-8-23

Practice Point: A timely motion to intervene should be granted where the intervenor has a real and substantial interest in the outcome.

November 8, 2023

Foreclosure, Real Property Actions and Proceedings Law (RPAPL)

SENDING THE NOTICE OF FORECLOSURE TO BOTH BORROWERS IN THE SAME ENVELOPE VIOLATED RPAPL 1304 (THIRD DEPT).

The Third Department, reversing Supreme Court, determined the bank in this foreclosure action failed to comply with RPAPL 1304 by sending the notice of foreclosure to both borrowers in the same envelope:

As the Second Department noted, the language of RPAPL 1304 (1) is careful to distinguish a borrower, singular, from borrowers, plural (see Wells Fargo Bank, N.A. v Yapkowitz, 199 AD3d at 134). However, RPAPL 1304 (2), which requires that notices be sent in separate envelopes, only discusses “borrower,” singular (see Wells Fargo Bank, N.A. v Yapkowitz, 199 AD3d at 134; RPAPL 1304 [2]). In that case, the Court also drew attention to the fact that, although it is possible that whichever borrower reads the notice would alert the other borrower of the mailing, this is not always what occurs (see Wells Fargo Bank, N.A. v Yapkowitz, 199 AD3d at 135). Accordingly, we now also adopt the holding of the Second Department in Wells Fargo Bank, N.A. Thus, given that the requisite 90-day notices were jointly addressed to both borrowers, plaintiff did not comply with RPAPL 1304 … . Deutsche Bank Natl. Trust Co. v Zatari, 2023 NY Slip Op 05436, Third Dept 10-26-23

Practice Point: Sending the notice of foreclosure to two borrowers in the same envelope is a violation RPAPL 1304.

October 26, 2023

Evidence, Foreclosure, Real Property Actions and Proceedings Law (RPAPL)

THE BANK IN THIS FORECLOSURE ACTION DID NOT PROVE COMPLIANCE WITH THE MAILING REQUIREMENTS OF RPAPL 1304 AND THEREFORE WAS NOT ENTITLED TO SUMMARY JUDGMENT (SECOND DEPT).

The Second Department, reversing Supreme Court in this foreclosure action, determined the plaintiff bank failed to demonstrate compliance with the notice requirements of RPAPL 1304 and therefore was not entitled to summary judgment:

The plaintiff … failed to demonstrate, prima facie, its compliance with RPAPL 1304, in that it failed to establish proof of the requisite mailing. The affidavit of Sarah Stonehocker, a vice president of loan documentation for Wells Fargo, the plaintiff’s loan servicer, was insufficient to establish that the notice was sent to the borrowers in the manner required by RPAPL 1304. Stonehocker averred that she had personal knowledge of Wells Fargo’s record-keeping practices and procedures, but she did not attest to having personal knowledge of the record-keeping practices and standard office mailing procedures of Walz Facility (hereinafter Walz), the entity, that according to tracking information printouts, mailed the RPAPL 1304 notices … . Nor did she attest that Walz’s records were incorporated into Wells Fargo’s own records or routinely relied upon in its business … . Thus, Stonehocker’s affidavit failed to establish “proof of a standard office mailing procedure designed to ensure that items are properly addressed and mailed, sworn to by someone with personal knowledge of the procedure” … .

Moreover, the plaintiff failed to establish, prima facie, that it strictly complied with RPAPL 1304 since it failed to demonstrate that it sent an individually addressed RPAPL 1304 notice to each borrower, as required by the statute … . U.S. Bank N.A. v Reddy, 2023 NY Slip Op 05417, Second Dept 10-25-23

Practice Point: Once again the bank’s failure to prove compliance with the mailing requirements of RPAPL 1304 resulted in reversal of summary judgment in this foreclosure action.

October 25, 2023

Evidence, Foreclosure, Real Property Actions and Proceedings Law (RPAPL)

IN THIS FORECLOSURE ACTION, THE PROOF THE NOTICE OF FORECLOSURE WAS MAILED IN ACCORDANCE WITH RPAPL 1304 WAS INSUFFICIENT; THE REFEREE’S REPORT SHOULD NOT HAVE BEEN CONFIRMED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the referee’s report in this foreclosure action should not have been confirmed. The proof the notice of foreclosure was mailed in accordance with RPAPL 1304 was insufficient:

… [T]he testimony of the plaintiff’s sole witness at trial, Lawrence Nardi, a case manager for the plaintiff’s servicer, Select Portfolio Servicing (hereinafter SPS), was insufficient to establish a standard office mailing procedure designed to ensure that notices were properly addressed and mailed … . Moreover, while the plaintiff presented copies of 90-day notices containing a 20-digit bar code, those letters contained no language indicating that they were sent by first-class or certified mail, or even that a mailing was done by the U.S. Postal Service … . In addition, the plaintiff failed to present any receipt or corresponding document issued by the U.S. Postal Service showing that the notice was actually sent by first-class or certified mail more than 90 days prior to commencement of the action … . Thus, the plaintiff failed to demonstrate its strict compliance with RPAPL 1304 … . U.S. Bank N.A. v Kissi, 2023 NY Slip Op 04790, Second Dept 9-27-23

Practice Point: Here the bank did not prove the notice of foreclosure was mailed in accordance with RPAPL 1304. Therefore the referee’s report should not have been confirmed.

September 27, 2023

Appeals, Civil Procedure, Contempt, Judges, Real Property Actions and Proceedings Law (RPAPL)

THE MOTION SEEKING A CIVIL CONTEMPT DETERMINATION COULD NOT BE HEARD BECAUSE THE UNDERLYING SUIT HAD BEEN SETTLED BY STIPULATION WITH PREJUDICE, STRIPPING SUPREME COURT OF SUBJECT MATTER JURISDICTION; A SUBJECT-MATTER-JURISDICTION ISSUE CAN BE RAISED FOR THE FIRST TIME ON APPEAL (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the civil contempt action should have been dismissed because the underlying lawsuit had been settled with prejudice by stipulation. Because the issue relates to a court’s subject matter jurisdiction it can be raised on appeal at any time. The underlying lawsuit was a property dispute and concerned the location of a fence. After the stipulation settling the suit, defendants refused to sign a fence location agreement. Because the underlying suit was discontinued with prejudice the plaintiffs only option is to commence a plenary action:

… [T]he defendants’ assertion, raised for the first time on appeal, that the Supreme Court lacked jurisdiction to entertain the plaintiffs’ motion, is properly before this Court, as a defect in subject matter jurisdiction may be raised at any time … .

“A motion must be addressed to a pending action” … , and a court lacks jurisdiction to entertain a motion after the action has been “‘unequivocally terminated . . . [by the execution of] an express, unconditional stipulation of discontinuance'” … , “or actual entry of judgment in accordance with the terms of the settlement” … .

Here, the Supreme Court lacked jurisdiction to entertain that branch of the plaintiffs’ motion which was to hold the defendants in civil contempt, since the action was unconditionally discontinued with prejudice by the parties’ stipulation, as memorialized in the settlement order … . Thus, the relief requested by the plaintiffs was not available by way of a motion, and could only be obtained by commencing a plenary action … . Riccio v Kukaj, 2023 NY Slip Op 04785, Second Dept 9-27-23

Practice Point: A stipulation settling a suit with prejudice strips the court of subject matter jurisdiction. Therefore a subsequent motion cannot be heard by the court and any further proceedings require a plenary action. A subject-matter-jurisdiction issue can be raised for the first time on appeal.

September 27, 2023

Contract Law, Evidence, Foreclosure, Real Property Actions and Proceedings Law (RPAPL)

THE PROOF THE NOTICE OF FORECLOSURE WAS MAILED TO DEFENDANT WAS INADEQUATE AND THE NOTICE DID NOT INCLUDE A STATEMENT REQUIRED BY RPAPL 1304; THEREFORE THE BANK’S SUMMARY JUDGMENT MOTION SHOULD NOT HAVE BEEN GRANTED (FIRST DEPT).

The Frist Department, reversing Supreme Court in this foreclosure action, determined compliance with the notice-of-foreclosure requirements in the mortgage as well land the notice requirements imposed the RPAPL 1304 was not demonstrated. Plaintiff should not have been awarded summary judgment:

… [N]either the affidavits nor the business records made the requisite demonstration of mailing as required by the mortgage agreement … . Although one of Serterus’s [the mortgage servicer’s] employees stated that Serterus followed the prior mortgage servicer’s procedures for mailing the default notice, she stated only that she had personal knowledge of Serterus’s recordkeeping practices and procedures, not that she had personal knowledge that the notice of default was actually mailed. Nor did the employee attest to her familiarity with the mailing procedures of either Chase, which the default notice identified as the sender, or its servicer … . Although the employee stated that records of the mailing were attached, the only record of mailing of the notice was the notice itself, which contained no information about whether and when it was mailed. Similarly, the affidavit by the other Serterus employee lacked any indication of how she concluded that the contractual default notice was, in fact, sent. In addition, defendant submitted an affidavit denying ever having received the notice … .

Further, service of the 90-day notice pre-foreclosure notice required by RPAPL 1304 did not comply with the requirement of service of the default notice required under the mortgage agreement. The mortgage agreement required that the default notice thereunder inform the defendant borrower that if the default was not cured by the date stated in the notice, the lender may require immediate payment in full. However, the RPAPL 1304 notice contains no such statement. Federal Natl. Mtge. Assn. v Adago, 2023 NY Slip Op 04717, First Dept 9-26-23

Practice Point: Proof of compliance with the notice-of-foreclosure requirements in the mortgage as well as the notice requirements imposed by RPAPL 1304 are prerequisites to foreclosure.

September 26, 2023