Real Property Law

Questions of Fact About Deed's Validity Preclude Summary Judgment in Foreclosure Action

First National Bank of Nevada v. Williams

NYLJ 6/8/10, p. 42, col. 2

AppDiv, First Dept.

(memorandum opinion)

In a mortgage foreclosure action, a party contesting mortgagor's title appealed from Supreme Court's award of summary judgment to mortgagee. The Appellate Division reversed, holding that the party contesting mortgagor's title had raised questions of fact about the validity of the deed executed to mortgagor.

Briggs owned the subject property before her death on Nov. 26, 2003. Gay is the executor of Briggs' estate, and contends that the subject property passed to the estate at death. Mortgagor, however took a deed on March 22, 2004, executed by St. Dic as Briggs' attorney-in-fact, pursuant to a durable power of attorney which recites that it was executed on Dec. 18, 2003 ' more than three weeks after Briggs' death. Mortgagor financed the purchase transaction with a mortgage loan from plaintiff-mortgagee. When mortgagor defaulted, mortgagee brought this foreclosure action, and Supreme Court granted summary judgment to mortgagee.

In reversing, the Appellate Division held that Gay, as estate executor, had raised triable issues of fact about the validity of the documents conveying title to the mortgagor. The court noted further than if the deed to mortgagor was void, a subsequent bona fide purchaser or encumbrancer takes nothing. Hence, in this case, mortgagee was not entitled to summary judgment because trial was necessary to resolve issues about the validity of the deed.

First Mortgagee Owes No Duty to Second Mortgagee

Rabinowitz v. Deutsche Bank

NYLJ 6/9/10, p. 29, col. 3

Supreme Ct., Rockland Cty.

(Weiner, J.)

In an action by second mortgagee against first mortgagee for damages arising from inadequate bids at a foreclosure sale, first mortgagee sought summary judgment. The court granted the motion, finding no defect in the process and no negligence by first mortgagee.

First mortgagee brought a foreclosure action, which resulted in a judgment of foreclosure and a foreclosure sale conducted on May 1, 2007. The winning bidder bid $450,000, enough to cover both the first and the second mortgages. The bidder then defaulted, necessitating a second sale. The sale price at the second sale was only $380,000, too little to cover even the first mortgage, and leaving the second mortgagee with none of the sale proceeds. Second mortgagee then brought this action, contending that first mortgagee had provided inadequate notice of the second sale, and had been negligent in maximizing the number of bidders.

In awarding summary judgment to first mortgagee, the court observed that first mortgagee had submitted evidence establishing that first mortgagee had complied with all statutory notice requirements. The court then rejected second mortgagee's argument that first mortgagee had been negligent in no taking down the names of all bidders at the first foreclosure sale so that they might purchase if the sale fell through. The court noted that negligence requires a duty, and observed that second mortgagee had come forward with no authority to suggest that a first mortgagee owes a duty of care to second mortgagee. The court then held that in any event, second mortgagee had not produced evidence to establish that any negligence was the proximate cause of second mortgagee's damages.

Questions of Fact About Deed's Validity Preclude Summary Judgment in Foreclosure Action

First National Bank of Nevada v. Williams

NYLJ 6/8/10, p. 42, col. 2

AppDiv, First Dept.

(memorandum opinion)

In a mortgage foreclosure action, a party contesting mortgagor's title appealed from Supreme Court's award of summary judgment to mortgagee. The Appellate Division reversed, holding that the party contesting mortgagor's title had raised questions of fact about the validity of the deed executed to mortgagor.

Briggs owned the subject property before her death on Nov. 26, 2003. Gay is the executor of Briggs' estate, and contends that the subject property passed to the estate at death. Mortgagor, however took a deed on March 22, 2004, executed by St. Dic as Briggs' attorney-in-fact, pursuant to a durable power of attorney which recites that it was executed on Dec. 18, 2003 ' more than three weeks after Briggs' death. Mortgagor financed the purchase transaction with a mortgage loan from plaintiff-mortgagee. When mortgagor defaulted, mortgagee brought this foreclosure action, and Supreme Court granted summary judgment to mortgagee.

In reversing, the Appellate Division held that Gay, as estate executor, had raised triable issues of fact about the validity of the documents conveying title to the mortgagor. The court noted further than if the deed to mortgagor was void, a subsequent bona fide purchaser or encumbrancer takes nothing. Hence, in this case, mortgagee was not entitled to summary judgment because trial was necessary to resolve issues about the validity of the deed.

First Mortgagee Owes No Duty to Second Mortgagee

Rabinowitz v. Deutsche Bank

NYLJ 6/9/10, p. 29, col. 3

Supreme Ct., Rockland Cty.

(Weiner, J.)

In an action by second mortgagee against first mortgagee for damages arising from inadequate bids at a foreclosure sale, first mortgagee sought summary judgment. The court granted the motion, finding no defect in the process and no negligence by first mortgagee.

First mortgagee brought a foreclosure action, which resulted in a judgment of foreclosure and a foreclosure sale conducted on May 1, 2007. The winning bidder bid $450,000, enough to cover both the first and the second mortgages. The bidder then defaulted, necessitating a second sale. The sale price at the second sale was only $380,000, too little to cover even the first mortgage, and leaving the second mortgagee with none of the sale proceeds. Second mortgagee then brought this action, contending that first mortgagee had provided inadequate notice of the second sale, and had been negligent in maximizing the number of bidders.

In awarding summary judgment to first mortgagee, the court observed that first mortgagee had submitted evidence establishing that first mortgagee had complied with all statutory notice requirements. The court then rejected second mortgagee's argument that first mortgagee had been negligent in no taking down the names of all bidders at the first foreclosure sale so that they might purchase if the sale fell through. The court noted that negligence requires a duty, and observed that second mortgagee had come forward with no authority to suggest that a first mortgagee owes a duty of care to second mortgagee. The court then held that in any event, second mortgagee had not produced evidence to establish that any negligence was the proximate cause of second mortgagee's damages.