Real Property Law

Mortgage Deemed Recorded When Delivered to City Register

Bank of New York v. Resles

NYLJ 11/18/10, p. 29, col. 1

AppDiv, First Dept.

(memorandum opinion)

In an action to foreclose a mortgage, Bank of New York (BONY) appealed from Supreme Court's determination that a mortgage held by Hamari enjoyed priority over BONY's mortgage. The Appellate Division reversed, holding that BONY's mortgage should be deemed recorded when delivered to the City Registrar, even though the Registrar did not record the mortgage for another two months.

Mortgagor executed a first mortgage in the amount of $225,000 to Madison Home Equities on April 12, 2004. That mortgage was recorded on June 1, 2004, and assigned to Countrywide on Nov. 3, 2004. On that same date, mortgagor executed the disputed second mortgage, in the amount of $215,000, to Countrywide. Although Countrywide's check for payment of fees associated with recordation of that mortgage was stamped “received” by the city on June 10, 2005, and stamped with an endorsement by the city on June 13, the mortgage was not formally recorded until Aug. 9. Both of Countrywide's mortgages were assigned to BONY on April 18, 2006, and BONY brought this foreclosure action the same day.

On May 5, 2005, after mortgagor executed the second Countrywide mortgage, but before that mortgage was recorded, mortgagor executed a mortgage to Hamari in the amount of $150,000. Hamari recorded that mortgage on July 1, 2005 ' after the Countrywide mortgage was submitted for recording, but more than a month before the mortgage was actually recorded. Hamari did not initially appear to contest BONY's foreclosure action. After a judgment of foreclosure and sale awarded BONY $465,924 to cover both mortgages plus costs and interest, and a public auction resulted in a bid of $523,000, Hamari appeared and contended that its mortgage enjoyed priority over BONY's second mortgage. Supreme Court, treating Hamari as if it had moved to vacate the default judgment, concluded that Hamari's mortgage did enjoy priority, and BONY appealed.

In reversing, the Appellate Division held that in order to vacate a default judgment, Hamari had to establish a meritorious defense. In concluding that Hamari had failed to do so, the court relied on Real Property Law section 317, which provides that an instrument is considered recorded from the time of delivery to the recording officer. Because BONY presented evidence ' in the form of the cover sheet of Countrywide's title agency, dated June 9, 2005, together with the endorsed check for payment of the recording fee ' the court concluded that BONY had established delivery of the instrument no later than June 15. Because Hamari's cover sheet was dated June 16, and its check was dated June 28, the court concluded that BONY's second mortgage was recorded before Hamari's, leaving BONY's second mortgage with priority over Hamari's mortgage.

COMMENT

When a County Clerk entirely fails to record or index a deed or mortgage properly delivered and paid for, the mortgage will be deemed recorded upon delivery, placing the world on constructive notice of its contents. Thus, in Homeowners Loan Corp. v. Recckio, 45 A.D.3d 1322, the mortgagee sought to foreclose on a property mortgaged by Recckio. Before Recckio executed the mortgage, he had conveyed a life estate in the property to his son, who delivered the deed to the County Clerk's office for recording prior to the recording of Homeowners' mortgage. The County Clerk failed entirely to record the deed from Recckio to his son. The court held that the mortgagee was not entitled to dismissal of the son's defense in the foreclosure action, concluding that “when a party establishes that an instrument was entitled to be recorded and was delivered, subsequent lien holders are deemed to have constructive notice of the first-delivered lien.” Thus the nonfeasance of the County Clerk, did not affect the status of the recording, and what should have been the first recorded lien was given priority. As in Homeowners Loan Corp, the court in Bank of New York v. Resles considered Bank of New York's second mortgage recorded at the time of delivery and gave that mortgage priority over Hamari's mortgage.

By contrast, when a County Clerk erroneously records or indexes a mortgage, the mortgagee's primary remedy may be against the county clerk, not against subsequent purchasers or mortgagees. In Baccari v. DeSanti, 70 A.D.2d 198 (1979), the court indicated that a mortgage incorrectly indexed by a third party company hired by the County Clerk would not constitute record notice to subsequent purchasers, but held that the clerk's office was not entitled to dismissal of mortgagee's negligence claim for misindexing the mortgage in the wrong municipality.

The Baccari alternative ' clerk's office liability ' is not feasible in the case of failure to record because there is no clear statutory mandate establishing how quickly the recording process must be completed, leading to difficult line-drawing problems. As between the two innocent parties, in the case of misfeasance, a mortgagee has the opportunity, after recording, to check the record and correct any potential problems. Perhaps that explains why courts might be unwilling to protect the mortgagee against a bona fide purchaser who could not have discovered the misindexed deed or mortgage. By contrast, in cases of nonfeasance, a mortgagee does not have this opportunity as no record is ever created and there is nothing for the mortgagee to correct. In that situation New York courts appear willing to protect the innocent mortgagee against the equally innocent subsequent purchaser. Thus, in Bank of New York, because the County Clerk failed to act and created no record, the Court of Appeals protected the Bank of New York and enforced its lien over that of Hamari.

Erroneously Recorded Satisfaction Cannot Be Cancelled Once Subsequent Mortgagee Relies on
Satisfaction

DLJ Mortgage Capital, Inc. v. Windsor

NYLJ 11/9/10, p. 31, col. 5

AppDiv, Second Dept.

(memorandum opinion)

In an action by first mortgagee to cancel a satisfaction erroneously recorded, and for a declaration that it holds an equitable mortgage on the property, subsequent mortgagee appealed from Supreme Court's denial of its summary judgment motion. The Appellate Division reversed, holding that because subsequent mortgagee relied on the satisfaction, it was free of first mortgagee's interest.

When first mortgagee's predecessor financed the purchase of a neighboring parcel, a portion of the loan proceeds were supposed to satisfy an existing parcel on the neighboring parcel. Those proceeds, however, were mistakenly credited toward satisfaction of a mortgage held on the subject parcel, which had been owned by the mortgagor. First mortgagee's predecessor then recorded a satisfaction of the mortgage on the subject parcel. Subsequent mortgagee then extended a loan to mortgagor, secured by a mortgage on the subject parcel. Subsequent mortgagee had no knowledge of the mistake, and relied on the satisfaction. Before subsequent mortgagee recorded, first mortgagee discovered the error, brought this action to cancel the satisfaction, and filed a notice of pendency. Subsequent mortgagee moved for summary judgment , but Supreme Court denied the motion. Subsequent mortgagee appealed.

In reversing, the Appellate Division started by noting that the notice of pendency did not create alien or any rights that did not already exist on the property. As a result, first mortgagee's filing of the notice of pendency before subsequent mortgagee recorded its deed did not create any rights in the first mortgagee. The court then held that a lien satisfied by mistake cannot be restored to its original status and priority once a subsequent party has relied on the satisfaction. Here, first mortgagee failed to raise a triable issue of fact in opposition to subsequent mortgagee's showing of innocent reliance on the satisfaction. The court also rejected first mortgagee's equitable subrogation claims, concluding that the negligence of first mortgagee's predecessor precluded that claim.

COMMENT

A mortgage satisfaction erroneously recorded cannot be restored to its original status and priority once a subsequent party has relied on the satisfaction to its detriment. In Regions Bank v. Campbell, 291 A.D.2d 437 , the court held that even though the mortgage satisfaction was mistakenly recorded, the mortgagee was precluded from cancelling the satisfaction because a purchaser had closed on the property and a second mortgagee had taken a mortgage on the property relying on a title report disclosing the recorded satisfaction. However, where subsequent parties do not detrimentally rely on an erroneous satisfaction, courts have consistently held that a mortgage that is superior does not lose its priority. In Citibank v. Kenney, 17 A.D.3d 305, the court restored priority to an erroneously satisfied mortgage over a junior mortgage because the junior mortgagee did not change its position in reliance on the erroneous satisfaction. The first mortgagee discovered the erroneously recorded satisfaction and recorded a replacement mortgage over the property before a subsequent party could detrimentally change its position.

A mortgagee who has erroneously recorded a satisfaction may be estopped from enforcing the mortgage even against the original mortgagor if the mortgagor has changed its position in reliance on the satisfaction. In First Union National Bank v. Tecklenburg, 2 A.D.3d 575, the court held that because the original mortgagor relied upon the lender's assurance that the mortgage had been paid in full, the mortgage lender was estopped from foreclosing on the mortgage. After the mortgagee erroneously recorded a satisfaction, the mortgagor sought an explanation of the satisfaction from the mortgagee. After repeated assurances that the mortgage had been paid off, the mortgagor borrowed additional money, obtaining a new mortgage from a second mortgagee. The court held that the mortgagor's acquisition of a second mortgage constituted a detrimental change in his position that estopped the mortgagee from foreclosing on the original mortgage. It remains uncertain whether the holding in First Union National Bank would be applied beyond factually similar cases in which the original mortgagor has at least inquired about the erroneous satisfaction.

Questions of Fact Preclude Summary Judgment in Claim Against Title Insurer

Emigrant Mortgage Company, Inc. v. Washington Title Insurance Co.

NYLJ 12/7/10, p. 32, col. 3

AppDiv, Second Dept.

(memorandum opinion)

In an action by mortgagee against its title insurer for losses suffered when its mortgage was not timely recorded, mortgagee appealed from Supreme Court's award of summary judgment to title insurer. The Appellate Division modified, holding that questions of fact about mortgagee's cooperation in litigation precluded an award of summary judgment to title insurer.

In 1999, mortgagee lent $472,500 to Drimmer to enable the latter to purchase the subject property. Title insurer issued a title insurance policy to mortgagee, and undertook to record the mortgage. Title insurer, however, failed to record before Drimmer sold the property to Sternberg in 2002. Sternberg encumbered the property with two mortgages in the total sum of $1,161,472. Both Sternberg mortgages were recorded before the Drimmer mortgage, which was not recorded until 2006. When mortgagee submitted a claim to title insurer in 2007, demanding payment of the full amount of the loan, title insurer hired counsel who prepared a proposed complaint seeking to establish a lien on the premises, and to foreclose. The complaint was never filed, and subsequently, mortgagee brought this action against title insurer. Supreme Court awarded summary judgment to title insurer, holding that mortgagee's failure to co-operate with title insurer's proposed litigation relieved title insurer of any liability on the policy. Mortgagee appealed.

In modifying, the Appellate Division rejected title insurer's claim that the mere filing of litigation against the title insurer established failure to co-operate. The court emphasized that even after this litigation was brought, mortgagee continued to provide all information that the title insurer requested. The court emphasized that the burden of establishing non-cooperation rests on the insurer, and in this case, conflicting deposition testimony precluded an award of summary judgment to either party.

Co-Tenant's Occupancy Presumed Permissive for Adverse Possession Purposes

Bank of America, N.A. v. 414 Midland Avenue Associates, LLC

NYLJ 11/16/10, p. 28, col. 4

AppDiv, Second Dept.

(memorandum opinion)

In an action by trustee to quiet title to its one-third interest in the subject property, co-tenant appealed from Supreme Court's dismissal of its affirmative defenses and counterclaims based on ouster, adverse possession, laches, waiver, and estoppel. The Appellate Division affirmed, holding that co-tenant's occupation was presumed permissive for the first 10 years or exclusive occupation, requiring dismissal of the affirmative defenses and counterclaims.

At the time of John Quirk's 1995 death, John's one-third interest in the subject property passed to his wife Edith; Leslie Quirk owned the remaining two-thirds interest. During her lifetime, Edith created a lifetime trust that included her interest in the property. Trustee administers that trust. Leslie Quirk bequeathed his interest to two Kupersmiths in equal shares, and in 1996 one of the Kupersmiths, as executor of Leslie's estate, executed a deed to the two Kupersmiths, purporting to convey “all” of the property. In 2007, Kenneth Kupersmith executed a quitclaim deed releasing his interest in the property to Corey Kupersmith, and in 2008, Corey purported to convey the entire property to the LLC, which promptly took out two mortgages on the property. Later that year, the trustee brought this quiet title action with respect to its one-third interest, and the LLC counterclaimed for a judgment that it is fee owner of the entire parcel. Supreme Court dismissed the affirmative defenses and counterclaims.

In affirming, the Appellate Division started by citing the statutory presumption that a tenant in common in possession of jointly-owned property holds that property for the benefit of a co-tenant not in possession. That presumption ceases after 10 years of exclusive possession (RPAPL section 541). The court then held that the LLC's mere recording of a deed, without a change in possession or actual notice to the absent co-tenant, did not constitute an ouster that would serve to rebut the statutory presumption. As a result, until the trustee received actual notice of a conveyance hostile to its interest ' which in this case did not occur until at least 2001 ' the adverse possession could not start to run. Because trustee brought this action in 2008, the LLC's adverse possession claim could not stand. The court then observed that the LLC had not made any factual allegations to support its claim that the trustee had voluntarily and intentionally abandoned a known right. As a result, Supreme Court had properly dismissed the affirmative defense of waiver. Finally, the court concluded that the LLC had failed to adequately allege facts to support its claims of equitable estoppel, laches, unclean hands, or culpable conduct.

Mortgage Deemed Recorded When Delivered to City Register

Bank of New York v. Resles

NYLJ 11/18/10, p. 29, col. 1

AppDiv, First Dept.

(memorandum opinion)

In an action to foreclose a mortgage, Bank of New York (BONY) appealed from Supreme Court's determination that a mortgage held by Hamari enjoyed priority over BONY's mortgage. The Appellate Division reversed, holding that BONY's mortgage should be deemed recorded when delivered to the City Registrar, even though the Registrar did not record the mortgage for another two months.

Mortgagor executed a first mortgage in the amount of $225,000 to Madison Home Equities on April 12, 2004. That mortgage was recorded on June 1, 2004, and assigned to Countrywide on Nov. 3, 2004. On that same date, mortgagor executed the disputed second mortgage, in the amount of $215,000, to Countrywide. Although Countrywide's check for payment of fees associated with recordation of that mortgage was stamped “received” by the city on June 10, 2005, and stamped with an endorsement by the city on June 13, the mortgage was not formally recorded until Aug. 9. Both of Countrywide's mortgages were assigned to BONY on April 18, 2006, and BONY brought this foreclosure action the same day.

On May 5, 2005, after mortgagor executed the second Countrywide mortgage, but before that mortgage was recorded, mortgagor executed a mortgage to Hamari in the amount of $150,000. Hamari recorded that mortgage on July 1, 2005 ' after the Countrywide mortgage was submitted for recording, but more than a month before the mortgage was actually recorded. Hamari did not initially appear to contest BONY's foreclosure action. After a judgment of foreclosure and sale awarded BONY $465,924 to cover both mortgages plus costs and interest, and a public auction resulted in a bid of $523,000, Hamari appeared and contended that its mortgage enjoyed priority over BONY's second mortgage. Supreme Court, treating Hamari as if it had moved to vacate the default judgment, concluded that Hamari's mortgage did enjoy priority, and BONY appealed.

In reversing, the Appellate Division held that in order to vacate a default judgment, Hamari had to establish a meritorious defense. In concluding that Hamari had failed to do so, the court relied on Real Property Law section 317, which provides that an instrument is considered recorded from the time of delivery to the recording officer. Because BONY presented evidence ' in the form of the cover sheet of Countrywide's title agency, dated June 9, 2005, together with the endorsed check for payment of the recording fee ' the court concluded that BONY had established delivery of the instrument no later than June 15. Because Hamari's cover sheet was dated June 16, and its check was dated June 28, the court concluded that BONY's second mortgage was recorded before Hamari's, leaving BONY's second mortgage with priority over Hamari's mortgage.

COMMENT

When a County Clerk entirely fails to record or index a deed or mortgage properly delivered and paid for, the mortgage will be deemed recorded upon delivery, placing the world on constructive notice of its contents. Thus, in Homeowners Loan Corp. v. Recckio, 45 A.D.3d 1322, the mortgagee sought to foreclose on a property mortgaged by Recckio. Before Recckio executed the mortgage, he had conveyed a life estate in the property to his son, who delivered the deed to the County Clerk's office for recording prior to the recording of Homeowners' mortgage. The County Clerk failed entirely to record the deed from Recckio to his son. The court held that the mortgagee was not entitled to dismissal of the son's defense in the foreclosure action, concluding that “when a party establishes that an instrument was entitled to be recorded and was delivered, subsequent lien holders are deemed to have constructive notice of the first-delivered lien.” Thus the nonfeasance of the County Clerk, did not affect the status of the recording, and what should have been the first recorded lien was given priority. As in Homeowners Loan Corp, the court in Bank of New York v. Resles considered Bank of New York's second mortgage recorded at the time of delivery and gave that mortgage priority over Hamari's mortgage.

By contrast, when a County Clerk erroneously records or indexes a mortgage, the mortgagee's primary remedy may be against the county clerk, not against subsequent purchasers or mortgagees. In Baccari v. DeSanti, 70 A.D.2d 198 (1979), the court indicated that a mortgage incorrectly indexed by a third party company hired by the County Clerk would not constitute record notice to subsequent purchasers, but held that the clerk's office was not entitled to dismissal of mortgagee's negligence claim for misindexing the mortgage in the wrong municipality.

The Baccari alternative ' clerk's office liability ' is not feasible in the case of failure to record because there is no clear statutory mandate establishing how quickly the recording process must be completed, leading to difficult line-drawing problems. As between the two innocent parties, in the case of misfeasance, a mortgagee has the opportunity, after recording, to check the record and correct any potential problems. Perhaps that explains why courts might be unwilling to protect the mortgagee against a bona fide purchaser who could not have discovered the misindexed deed or mortgage. By contrast, in cases of nonfeasance, a mortgagee does not have this opportunity as no record is ever created and there is nothing for the mortgagee to correct. In that situation New York courts appear willing to protect the innocent mortgagee against the equally innocent subsequent purchaser. Thus, in Bank of New York, because the County Clerk failed to act and created no record, the Court of Appeals protected the Bank of New York and enforced its lien over that of Hamari.

Erroneously Recorded Satisfaction Cannot Be Cancelled Once Subsequent Mortgagee Relies on
Satisfaction

DLJ Mortgage Capital, Inc. v. Windsor

NYLJ 11/9/10, p. 31, col. 5

AppDiv, Second Dept.

(memorandum opinion)

In an action by first mortgagee to cancel a satisfaction erroneously recorded, and for a declaration that it holds an equitable mortgage on the property, subsequent mortgagee appealed from Supreme Court's denial of its summary judgment motion. The Appellate Division reversed, holding that because subsequent mortgagee relied on the satisfaction, it was free of first mortgagee's interest.

When first mortgagee's predecessor financed the purchase of a neighboring parcel, a portion of the loan proceeds were supposed to satisfy an existing parcel on the neighboring parcel. Those proceeds, however, were mistakenly credited toward satisfaction of a mortgage held on the subject parcel, which had been owned by the mortgagor. First mortgagee's predecessor then recorded a satisfaction of the mortgage on the subject parcel. Subsequent mortgagee then extended a loan to mortgagor, secured by a mortgage on the subject parcel. Subsequent mortgagee had no knowledge of the mistake, and relied on the satisfaction. Before subsequent mortgagee recorded, first mortgagee discovered the error, brought this action to cancel the satisfaction, and filed a notice of pendency. Subsequent mortgagee moved for summary judgment , but Supreme Court denied the motion. Subsequent mortgagee appealed.

In reversing, the Appellate Division started by noting that the notice of pendency did not create alien or any rights that did not already exist on the property. As a result, first mortgagee's filing of the notice of pendency before subsequent mortgagee recorded its deed did not create any rights in the first mortgagee. The court then held that a lien satisfied by mistake cannot be restored to its original status and priority once a subsequent party has relied on the satisfaction. Here, first mortgagee failed to raise a triable issue of fact in opposition to subsequent mortgagee's showing of innocent reliance on the satisfaction. The court also rejected first mortgagee's equitable subrogation claims, concluding that the negligence of first mortgagee's predecessor precluded that claim.

COMMENT

A mortgage satisfaction erroneously recorded cannot be restored to its original status and priority once a subsequent party has relied on the satisfaction to its detriment. In Regions Bank v. Campbell, 291 A.D.2d 437 , the court held that even though the mortgage satisfaction was mistakenly recorded, the mortgagee was precluded from cancelling the satisfaction because a purchaser had closed on the property and a second mortgagee had taken a mortgage on the property relying on a title report disclosing the recorded satisfaction. However, where subsequent parties do not detrimentally rely on an erroneous satisfaction, courts have consistently held that a mortgage that is superior does not lose its priority. In Citibank v. Kenney, 17 A.D.3d 305, the court restored priority to an erroneously satisfied mortgage over a junior mortgage because the junior mortgagee did not change its position in reliance on the erroneous satisfaction. The first mortgagee discovered the erroneously recorded satisfaction and recorded a replacement mortgage over the property before a subsequent party could detrimentally change its position.

A mortgagee who has erroneously recorded a satisfaction may be estopped from enforcing the mortgage even against the original mortgagor if the mortgagor has changed its position in reliance on the satisfaction. In First Union National Bank v. Tecklenburg, 2 A.D.3d 575, the court held that because the original mortgagor relied upon the lender's assurance that the mortgage had been paid in full, the mortgage lender was estopped from foreclosing on the mortgage. After the mortgagee erroneously recorded a satisfaction, the mortgagor sought an explanation of the satisfaction from the mortgagee. After repeated assurances that the mortgage had been paid off, the mortgagor borrowed additional money, obtaining a new mortgage from a second mortgagee. The court held that the mortgagor's acquisition of a second mortgage constituted a detrimental change in his position that estopped the mortgagee from foreclosing on the original mortgage. It remains uncertain whether the holding in First Union National Bank would be applied beyond factually similar cases in which the original mortgagor has at least inquired about the erroneous satisfaction.

Questions of Fact Preclude Summary Judgment in Claim Against Title Insurer

Emigrant Mortgage Company, Inc. v. Washington Title Insurance Co.

NYLJ 12/7/10, p. 32, col. 3

AppDiv, Second Dept.

(memorandum opinion)

In an action by mortgagee against its title insurer for losses suffered when its mortgage was not timely recorded, mortgagee appealed from Supreme Court's award of summary judgment to title insurer. The Appellate Division modified, holding that questions of fact about mortgagee's cooperation in litigation precluded an award of summary judgment to title insurer.

In 1999, mortgagee lent $472,500 to Drimmer to enable the latter to purchase the subject property. Title insurer issued a title insurance policy to mortgagee, and undertook to record the mortgage. Title insurer, however, failed to record before Drimmer sold the property to Sternberg in 2002. Sternberg encumbered the property with two mortgages in the total sum of $1,161,472. Both Sternberg mortgages were recorded before the Drimmer mortgage, which was not recorded until 2006. When mortgagee submitted a claim to title insurer in 2007, demanding payment of the full amount of the loan, title insurer hired counsel who prepared a proposed complaint seeking to establish a lien on the premises, and to foreclose. The complaint was never filed, and subsequently, mortgagee brought this action against title insurer. Supreme Court awarded summary judgment to title insurer, holding that mortgagee's failure to co-operate with title insurer's proposed litigation relieved title insurer of any liability on the policy. Mortgagee appealed.

In modifying, the Appellate Division rejected title insurer's claim that the mere filing of litigation against the title insurer established failure to co-operate. The court emphasized that even after this litigation was brought, mortgagee continued to provide all information that the title insurer requested. The court emphasized that the burden of establishing non-cooperation rests on the insurer, and in this case, conflicting deposition testimony precluded an award of summary judgment to either party.

Co-Tenant's Occupancy Presumed Permissive for Adverse Possession Purposes

Bank of America, N.A. v. 414 Midland Avenue Associates, LLC

NYLJ 11/16/10, p. 28, col. 4

AppDiv, Second Dept.

(memorandum opinion)

In an action by trustee to quiet title to its one-third interest in the subject property, co-tenant appealed from Supreme Court's dismissal of its affirmative defenses and counterclaims based on ouster, adverse possession, laches, waiver, and estoppel. The Appellate Division affirmed, holding that co-tenant's occupation was presumed permissive for the first 10 years or exclusive occupation, requiring dismissal of the affirmative defenses and counterclaims.

At the time of John Quirk's 1995 death, John's one-third interest in the subject property passed to his wife Edith; Leslie Quirk owned the remaining two-thirds interest. During her lifetime, Edith created a lifetime trust that included her interest in the property. Trustee administers that trust. Leslie Quirk bequeathed his interest to two Kupersmiths in equal shares, and in 1996 one of the Kupersmiths, as executor of Leslie's estate, executed a deed to the two Kupersmiths, purporting to convey “all” of the property. In 2007, Kenneth Kupersmith executed a quitclaim deed releasing his interest in the property to Corey Kupersmith, and in 2008, Corey purported to convey the entire property to the LLC, which promptly took out two mortgages on the property. Later that year, the trustee brought this quiet title action with respect to its one-third interest, and the LLC counterclaimed for a judgment that it is fee owner of the entire parcel. Supreme Court dismissed the affirmative defenses and counterclaims.

In affirming, the Appellate Division started by citing the statutory presumption that a tenant in common in possession of jointly-owned property holds that property for the benefit of a co-tenant not in possession. That presumption ceases after 10 years of exclusive possession (RPAPL section 541). The court then held that the LLC's mere recording of a deed, without a change in possession or actual notice to the absent co-tenant, did not constitute an ouster that would serve to rebut the statutory presumption. As a result, until the trustee received actual notice of a conveyance hostile to its interest ' which in this case did not occur until at least 2001 ' the adverse possession could not start to run. Because trustee brought this action in 2008, the LLC's adverse possession claim could not stand. The court then observed that the LLC had not made any factual allegations to support its claim that the trustee had voluntarily and intentionally abandoned a known right. As a result, Supreme Court had properly dismissed the affirmative defense of waiver. Finally, the court concluded that the LLC had failed to adequately allege facts to support its claims of equitable estoppel, laches, unclean hands, or culpable conduct.