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.