Cooperatives & Condominiums

Second Mortgage Enjoys Priority over Lien

Plotch v. U.S. Bank, N.A.

NYLJ 6/12/15, p. 29, col. 6

AppDiv, Second Dept.

(memorandum decision)

In an action by condominium unit owner for a declaration that he owns the unit free of a mortgage executed by his predecessor, who lost title through the foreclosure of the condominium's lien for common charges, unit owner appealed from Supreme Court's grant of mortgagee bank's summary judgment motion. The Appellate Division affirmed, holding that the bank's consolidated mortgage enjoyed priority over the lien for common charges.

Unit owner's predecessor executed a first mortgage in 2004 to secure a loan of $136,990. The following year, the predecessor executed a second mortgage to the same banking entity to secure a loan of $31,313.61. The parties also executed a consolidation agreement that consolidated the two loans into a single mortgage lien in the amount of $166,500. In 2009, the condominium filed a lien for common charges in the amount of $10,277, and subsequently brought an action to foreclose on the lien. The judgment of foreclosure stated that the sale would be subject to the “first mortgage on the premises.” Current unit owner bought the unit for $15,000. In 2012, unit owner brought this action for a declaration that the second mortgage lien, in the amount of $31,313.61, was subordinate to the lien for common charges. Supreme Court awarded summary judgment to mortgagee bank, and unit owner appealed.

In affirming, the Appellate Division held that the RPL 339-z's statutory lien for common charges should be narrowly construed because it is in derogation of the common law principle of “first in time, first in right.” The court then held that mortgagee bank's second mortgage comes within the ambit of the statutory priority accorded to sums unpaid on a first mortgage of record.

Eviction of Unit Owners Upheld

Gordon v. 476 Broadway Realty Corp.

NYLJ 6/22/15, p. 18, col. 2

AppDiv, First Dept.

(memorandum opinion)

In an action by co-op unit owners to enjoin their eviction, unit owners appealed from Supreme Court's grant of summary judgment on its eviction counterclaim and from that court's dismissal of their retaliatory eviction defense. The Appellate Division affirmed, holding that unit owner had failed to raise questions of fact.

The co-op corporation's shareholders unanimously voted to terminate unit owners' lease based on their interference with waterproofing testing and repair work in their apartment. Unit owners challenged the eviction, alleging bad faith and retaliatory eviction. Supreme Court awarded summary judgment to the co-op corporation.

In affirming, the Appellate Division concluded that unit owners had failed to raise a question of fact about whether the co-op had acted in bad faith, outside of its authority, or for an illegitimate corporate purpose. The court also held that the statutory presumption of retaliation does not apply because the coop terminated the tenancy based on the alleged violations of the terms of the proprietary lease. The court also held that unit owners were not entitled to a stay of eviction to cure the alleged breach because the co-op validly terminated the lease on the ground of a pattern of objectionable conduct.

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Second Mortgage Enjoys Priority over Lien

Plotch v. U.S. Bank, N.A.

NYLJ 6/12/15, p. 29, col. 6

AppDiv, Second Dept.

(memorandum decision)

In an action by condominium unit owner for a declaration that he owns the unit free of a mortgage executed by his predecessor, who lost title through the foreclosure of the condominium's lien for common charges, unit owner appealed from Supreme Court's grant of mortgagee bank's summary judgment motion. The Appellate Division affirmed, holding that the bank's consolidated mortgage enjoyed priority over the lien for common charges.

Unit owner's predecessor executed a first mortgage in 2004 to secure a loan of $136,990. The following year, the predecessor executed a second mortgage to the same banking entity to secure a loan of $31,313.61. The parties also executed a consolidation agreement that consolidated the two loans into a single mortgage lien in the amount of $166,500. In 2009, the condominium filed a lien for common charges in the amount of $10,277, and subsequently brought an action to foreclose on the lien. The judgment of foreclosure stated that the sale would be subject to the “first mortgage on the premises.” Current unit owner bought the unit for $15,000. In 2012, unit owner brought this action for a declaration that the second mortgage lien, in the amount of $31,313.61, was subordinate to the lien for common charges. Supreme Court awarded summary judgment to mortgagee bank, and unit owner appealed.

In affirming, the Appellate Division held that the RPL 339-z's statutory lien for common charges should be narrowly construed because it is in derogation of the common law principle of “first in time, first in right.” The court then held that mortgagee bank's second mortgage comes within the ambit of the statutory priority accorded to sums unpaid on a first mortgage of record.

Eviction of Unit Owners Upheld

Gordon v. 476 Broadway Realty Corp.

NYLJ 6/22/15, p. 18, col. 2

AppDiv, First Dept.

(memorandum opinion)

In an action by co-op unit owners to enjoin their eviction, unit owners appealed from Supreme Court's grant of summary judgment on its eviction counterclaim and from that court's dismissal of their retaliatory eviction defense. The Appellate Division affirmed, holding that unit owner had failed to raise questions of fact.

The co-op corporation's shareholders unanimously voted to terminate unit owners' lease based on their interference with waterproofing testing and repair work in their apartment. Unit owners challenged the eviction, alleging bad faith and retaliatory eviction. Supreme Court awarded summary judgment to the co-op corporation.

In affirming, the Appellate Division concluded that unit owners had failed to raise a question of fact about whether the co-op had acted in bad faith, outside of its authority, or for an illegitimate corporate purpose. The court also held that the statutory presumption of retaliation does not apply because the coop terminated the tenancy based on the alleged violations of the terms of the proprietary lease. The court also held that unit owners were not entitled to a stay of eviction to cure the alleged breach because the co-op validly terminated the lease on the ground of a pattern of objectionable conduct.

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