Real Property Law

County Clerk Need Not Accept Copy of Lost Mortgage for Recording

J.P. Morgan Chase Bank, N.A. v. Mbanefo

NYLJ 12/5/14, p. 30, col. 5

AppDiv, Second Dept.

(memorandum opinion)

In an action to compel the county clerk to accept a copy of a mortgage for recording, mortgagee bank appealed from Supreme Court's dismissal of the complaint. The Appellate Division affirmed, holding that mortgagee did not state a cause of action because the complaint failed to allege that the copy of the mortgage was valid on its face.

Mortgagee bank allegedly acquired a mortgage from mortgagor by a written instrument executed on Oct. 19, 2005. The original instrument was not recorded because it was lost or destroyed. In June 2012, mortgagee brought this action to compel the county clerk to accept a copy of the mortgage for recording. Mortgagor moved to dismiss, arguing that mortgagee was, in effect, seeking a judgment authorizing the recording of an equitable mortgage, an action subject to a six-year statute of limitations. Mortgagor also argued that mortgagee had failed to demonstrate that the parties intended a mortgage in the first place. Supreme Court dismissed the complaint, holding that the claim was governed by the CPLR 213(1)'s catch-all six-year statute of limitations. Mortgagee appealed.

In affirming, the Appellate Division relied on a different ground. The court held that mortgagee bank had not stated a cause of action because the complaint did not allege that the copy of the mortgage was valid on its face, a necessary element of a cause of action to compel the county clerk to accept the document for recording. As a result, the court held that it could not determine what statute of limitations was applicable. The court then noted that mortgagee's contention that it should be permitted to amend its complaint was not properly before the court.

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Court Orders Sale of Property As a Single Unit

Darby Group Companies, Inc. v. Wulforst Acquisition, LLC

NYLJ 12/10/14, p. 21, col. 2

Supreme Ct., Suffolk Cty.

(Whelan, J.)

In a commercial mortgage foreclosure action, mortgagee sought confirmation of the referee's report and issuance and entry of a judgment of foreclosure and sale. Individuals who would be liable for any deficiency if the property does not sell at a price in excess of the mortgage objected to the proposed sale of the property as a whole rather than in pieces. The court confirmed the referee's report, finding no evidence that individual sales would garner a higher price.

Mortagee obtained a mortgage from corporate developer to secure a $2.8 million mortgage loan. Developer expected to build a residential subdivision contiguous with a golf course. When developer defaulted, mortgagee brought this foreclosure action. Individual guarantors objected to the referee's report recommending sale as one parcel.

In confirming the referee's report, the court emphasized that the local zoning board's subdivision approval was conditional, and emphasized too the fact that the mortgage loan was made before there had been no subdivision. Finally, the court noted that guarantors had provided no comparison between the potential sale price as one parcel and the sale price if subdivided. As a result, the court confirmed the referee's report.

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Not-for-Profit Corporation Entitled to Exemption for Property Used to House Staff Members

Matter of Merry-Go-Round Playhouse, Inc. v. Assessor of City of Auburn

NYLJ 11/19/14, p. 22, col. 1

Court of Appeals

(Opinion by Lippman, Ch. J.)

In a proceeding for review of tax assessments, the city appealed from the Appellate Division's reversal of Supreme Court's grant of the city's motion for summary judgment and denial of the taxpayer's motion for summary judgment. The Court of Appeals affirmed, holding that a not-for-profit corporation is entitled to a tax exemption for property it uses to house its staff members.

Landowner is a not-for-profit corporation that operates two theaters, a year-round youth theater that tours the state and a summer stock theater that puts on large scale musicals, for which it charges admission. In 2011, landowner bought two apartment buildings one with 14 units and the other with 16, for the purpose of housing staff members and actors. Landowner then filed applications for real property tax exemptions for the two properties. When the city denied the exemptions, landowner brought this proceeding. Supreme Court upheld the city's determinations, but the appellate division reversed and granted the petition. The city appealed.

In affirming, the Court of Appeals conceded that the summer stock theater did not have the same educational component as the youth theater, but indicated that both theaters were geared toward promoting the arts. The court noted that even though the summer stock theater charges admission, the theater breaks even or operates at a loss. The court concluded that the housing provided by the theater enabled the landowner to recruit qualified staff, which advanced the landowner's exempt purpose. As a result, the use of the buildings for staff housing was reasonably incidental to landowner's primary purpose.

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County Clerk Need Not Accept Copy of Lost Mortgage for Recording

J.P. Morgan Chase Bank, N.A. v. Mbanefo

NYLJ 12/5/14, p. 30, col. 5

AppDiv, Second Dept.

(memorandum opinion)

In an action to compel the county clerk to accept a copy of a mortgage for recording, mortgagee bank appealed from Supreme Court's dismissal of the complaint. The Appellate Division affirmed, holding that mortgagee did not state a cause of action because the complaint failed to allege that the copy of the mortgage was valid on its face.

Mortgagee bank allegedly acquired a mortgage from mortgagor by a written instrument executed on Oct. 19, 2005. The original instrument was not recorded because it was lost or destroyed. In June 2012, mortgagee brought this action to compel the county clerk to accept a copy of the mortgage for recording. Mortgagor moved to dismiss, arguing that mortgagee was, in effect, seeking a judgment authorizing the recording of an equitable mortgage, an action subject to a six-year statute of limitations. Mortgagor also argued that mortgagee had failed to demonstrate that the parties intended a mortgage in the first place. Supreme Court dismissed the complaint, holding that the claim was governed by the CPLR 213(1)'s catch-all six-year statute of limitations. Mortgagee appealed.

In affirming, the Appellate Division relied on a different ground. The court held that mortgagee bank had not stated a cause of action because the complaint did not allege that the copy of the mortgage was valid on its face, a necessary element of a cause of action to compel the county clerk to accept the document for recording. As a result, the court held that it could not determine what statute of limitations was applicable. The court then noted that mortgagee's contention that it should be permitted to amend its complaint was not properly before the court.

'

Court Orders Sale of Property As a Single Unit

Darby Group Companies, Inc. v. Wulforst Acquisition, LLC

NYLJ 12/10/14, p. 21, col. 2

Supreme Ct., Suffolk Cty.

(Whelan, J.)

In a commercial mortgage foreclosure action, mortgagee sought confirmation of the referee's report and issuance and entry of a judgment of foreclosure and sale. Individuals who would be liable for any deficiency if the property does not sell at a price in excess of the mortgage objected to the proposed sale of the property as a whole rather than in pieces. The court confirmed the referee's report, finding no evidence that individual sales would garner a higher price.

Mortagee obtained a mortgage from corporate developer to secure a $2.8 million mortgage loan. Developer expected to build a residential subdivision contiguous with a golf course. When developer defaulted, mortgagee brought this foreclosure action. Individual guarantors objected to the referee's report recommending sale as one parcel.

In confirming the referee's report, the court emphasized that the local zoning board's subdivision approval was conditional, and emphasized too the fact that the mortgage loan was made before there had been no subdivision. Finally, the court noted that guarantors had provided no comparison between the potential sale price as one parcel and the sale price if subdivided. As a result, the court confirmed the referee's report.

'

Not-for-Profit Corporation Entitled to Exemption for Property Used to House Staff Members

Matter of Merry-Go-Round Playhouse, Inc. v. Assessor of City of Auburn

NYLJ 11/19/14, p. 22, col. 1

Court of Appeals

(Opinion by Lippman, Ch. J.)

In a proceeding for review of tax assessments, the city appealed from the Appellate Division's reversal of Supreme Court's grant of the city's motion for summary judgment and denial of the taxpayer's motion for summary judgment. The Court of Appeals affirmed, holding that a not-for-profit corporation is entitled to a tax exemption for property it uses to house its staff members.

Landowner is a not-for-profit corporation that operates two theaters, a year-round youth theater that tours the state and a summer stock theater that puts on large scale musicals, for which it charges admission. In 2011, landowner bought two apartment buildings one with 14 units and the other with 16, for the purpose of housing staff members and actors. Landowner then filed applications for real property tax exemptions for the two properties. When the city denied the exemptions, landowner brought this proceeding. Supreme Court upheld the city's determinations, but the appellate division reversed and granted the petition. The city appealed.

In affirming, the Court of Appeals conceded that the summer stock theater did not have the same educational component as the youth theater, but indicated that both theaters were geared toward promoting the arts. The court noted that even though the summer stock theater charges admission, the theater breaks even or operates at a loss. The court concluded that the housing provided by the theater enabled the landowner to recruit qualified staff, which advanced the landowner's exempt purpose. As a result, the use of the buildings for staff housing was reasonably incidental to landowner's primary purpose.

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