Real Property Law

Statute of Limitations on Forgery Claim Runs from Time of Discovery

Budhu v. Budhu

NYLJ 9/7/11

Supreme Ct., Kings Cty.

(Lewis, J.)

In an action to nullify an allegedly forged deed, grantee of the forged deed moved for summary judgment contending that the claim is barred by the statute of limitations. The court denied the summary judgment motion, holding that the statute runs from the time of discovery of the forgery, and recording in the city register's office did not constitute notice triggering the running of the statute.

A 1983 deed conveyed the subject property to plaintiff Parbatee Budhu and her brother Parmanand Budhu as tenants in common. In 1985, Parbatee moved out of the premises in response to a family dispute. A 1986 deed, recorded with the City Register, transferred title from Parbatee and Parmanand to Parmanand and Mohan Budhu. (Mohan is the father of Parbatee and Parmanand). Two years later, Parmanand transferred his interest to Mohan and, in 2003, Mohan transferred title to Vijay (Parbatee's sister). Parbatee's mother died in 2008, and Parbatee then requested that Mohan provide her with documents concerning the premises. After a delay of several months, Mohan presented Parbatee with the 1986 deed. Parbatee then brought this action to invalidate the 1986 deed, contending that it was forged. Mohan and Vijay sought summary judgment.

In denying the summary judgment motion, the court cited CPLR section 213(8), which provides that an action for fraud must be brought within six years from the date the cause of action accrued or two years “from the time the plaintiff discovered the fraud, or could with reasonable diligence have discovered it.” The six-year period had clearly expired, but the court held that Parbatee had brought the action within two years of discovery, and that mere recording of the deed did not mean that she could, with reasonable diligence, have discovered the fraud. The court noted that she would be aware of the fraud only when she possessed knowledge from which the fraud could be inferred. Recording of the deed was not sufficient to alert a reasonably diligent person of a fraudulent transfer, because Parbatee would have had no reason to check the registry.

Effect of Bankruptcy Discharge on Judgment Lien

Nelson, L.P. v. Jannace

NYLJ 9/15/11, p. 23, col. 2

AppDiv, Second Dept.

(memorandum opinion)

In an action for specific performance of two real estate purchase contracts, owners appealed from Supreme Court's renewal of a judgment lien. The Appellate Division modified by directing that a qualified discharge of record be marked on the docket of a 2000 judgment, but otherwise affirmed, holding that owners' discharge in bankruptcy did not have any effect on plaintiffs' judgment lien.

In their action for specific performance, plaintiff obtained a judgment in its favor after trial. Before judgment was entered, one of the defendant owners, Jannace, filed a bankruptcy petition. As a result, in 2000, Supreme Court entered a judgment only against the other defendant, Woods. He then filed for bankruptcy and received a discharge. Jannace subsequently received a discharge. In 2009, plaintiff sought a renewal judgment, extending the lien on the real property for an additional 10 years. Woods and Jannace cross-moved to direct that a discharge of record be marked upon the docket of the judgment. Supreme Court extended the judgment lien, and the defendants appealed.

The Appellate Division modified to hold that the defendants were entitled to a qualified discharge of their liability. The bankruptcy proceedings did not invalidate plaintiff's lien on defendants' real property, but it did discharge any personal liability defendants might have had. As a result, they were entitled to a qualified discharge.

Statute of Limitations on Forgery Claim Runs from Time of Discovery

Budhu v. Budhu

NYLJ 9/7/11

Supreme Ct., Kings Cty.

(Lewis, J.)

In an action to nullify an allegedly forged deed, grantee of the forged deed moved for summary judgment contending that the claim is barred by the statute of limitations. The court denied the summary judgment motion, holding that the statute runs from the time of discovery of the forgery, and recording in the city register's office did not constitute notice triggering the running of the statute.

A 1983 deed conveyed the subject property to plaintiff Parbatee Budhu and her brother Parmanand Budhu as tenants in common. In 1985, Parbatee moved out of the premises in response to a family dispute. A 1986 deed, recorded with the City Register, transferred title from Parbatee and Parmanand to Parmanand and Mohan Budhu. (Mohan is the father of Parbatee and Parmanand). Two years later, Parmanand transferred his interest to Mohan and, in 2003, Mohan transferred title to Vijay (Parbatee's sister). Parbatee's mother died in 2008, and Parbatee then requested that Mohan provide her with documents concerning the premises. After a delay of several months, Mohan presented Parbatee with the 1986 deed. Parbatee then brought this action to invalidate the 1986 deed, contending that it was forged. Mohan and Vijay sought summary judgment.

In denying the summary judgment motion, the court cited CPLR section 213(8), which provides that an action for fraud must be brought within six years from the date the cause of action accrued or two years “from the time the plaintiff discovered the fraud, or could with reasonable diligence have discovered it.” The six-year period had clearly expired, but the court held that Parbatee had brought the action within two years of discovery, and that mere recording of the deed did not mean that she could, with reasonable diligence, have discovered the fraud. The court noted that she would be aware of the fraud only when she possessed knowledge from which the fraud could be inferred. Recording of the deed was not sufficient to alert a reasonably diligent person of a fraudulent transfer, because Parbatee would have had no reason to check the registry.

Effect of Bankruptcy Discharge on Judgment Lien

Nelson, L.P. v. Jannace

NYLJ 9/15/11, p. 23, col. 2

AppDiv, Second Dept.

(memorandum opinion)

In an action for specific performance of two real estate purchase contracts, owners appealed from Supreme Court's renewal of a judgment lien. The Appellate Division modified by directing that a qualified discharge of record be marked on the docket of a 2000 judgment, but otherwise affirmed, holding that owners' discharge in bankruptcy did not have any effect on plaintiffs' judgment lien.

In their action for specific performance, plaintiff obtained a judgment in its favor after trial. Before judgment was entered, one of the defendant owners, Jannace, filed a bankruptcy petition. As a result, in 2000, Supreme Court entered a judgment only against the other defendant, Woods. He then filed for bankruptcy and received a discharge. Jannace subsequently received a discharge. In 2009, plaintiff sought a renewal judgment, extending the lien on the real property for an additional 10 years. Woods and Jannace cross-moved to direct that a discharge of record be marked upon the docket of the judgment. Supreme Court extended the judgment lien, and the defendants appealed.

The Appellate Division modified to hold that the defendants were entitled to a qualified discharge of their liability. The bankruptcy proceedings did not invalidate plaintiff's lien on defendants' real property, but it did discharge any personal liability defendants might have had. As a result, they were entitled to a qualified discharge.