Thursday, February 26, 2015

Judge Dismisses Foreclosure Action for Lack of Notice

A Brooklyn Commercial Division judge, ruling in a case of first impression, dismissed a foreclosure action because the tenants of a mixed-use building that was not owner-occupied were given no notice.
Ruling in 650 Brooklyn LLC v. Hunte, 504623/13, Supreme Court Justice Carolyn Demarest ( See Profile) held the mortgage holder violated a 2009 amendment to Real Property Actions and Proceedings Law §1303.
Demarest said §1303(1)(b) "requires service notice on 'any tenant of a dwelling unit' without regard to the size or occupancy of the dwelling." She rejected the mortgage holder's claim that the notice requirement was triggered only when the tenants were parties to the foreclosure.
The opinion quoted the amendment's sponsor memo stating that "20 percent of all foreclosure filings across the country are in non-owner occupied properties. Often, renters have been unaware that their landlords are in default until utilities are shut off or an eviction notice appears on their door."
"Failure to enforce the statute as written, consistent with prior determinations that compliance is a condition precedent to maintenance of the foreclosure action, would defeat the purpose of the legislation, to protect tenants who might not be otherwise aware of their rights or even of the pendency of the action," the ruling stated.
Robert Brown, who represented the defendants, Eva and Steven Hunte, said the building housed a church and two residential units. The Huntes are members of the church but do not live in the building, which is in "a distressed area of Brooklyn," Brown said.
The mortgage had a principal balance of $180,000 when it fell into default in late 2012.
Keith Brandofino, a partner at Kilpatrick Townsend, represented the plaintiff mortgage bank. He did not respond to a request for comment.

Tuesday, February 10, 2015

650 Brooklyn, LLC, v. Hunte et al., Index No. 504623/2013
Supreme Court of the State of New York: Kings County
I.A.S. Justice Carolyn E. Demarest
Decision & Order dated: 02/05/2015

            A Kings County Supreme Court Justice granted dismissal in favor of building owners in an action to foreclose a mortgage on a Brooklyn, New York “mixed used” property due to the lender’s admitted failure to give notice of the action to the residential tenants of the building.

            Plaintiff 650 Brooklyn, LLC brought an action to foreclose a mortgage against building owners Eva and Steve Hunte of Brooklyn, New York. The “mixed use” building contained a church as well as two residential apartments.

The building owners, via their attorney Robert E. Brown, moved for dismissal of the foreclosure action because the lender didn’t give notice to the residential tenants of the mixed use building. The Court agreed.

Mr. Brown successfully argued that a law enacted in the wake of the foreclosure crisis to protect tenants, mandated that tenants in mixed use buildings be given notice of the foreclosure action. In opposition, counsel for the lender acknowledged that it did not give the tenants of the building notice claiming that it was not required to do so.

The Supreme Court rejected the lender’s counsel’s argument, holding that proper notice to the tenants was a condition that must be met before the lender could maintain a foreclosure action and dismissed the foreclosure action.