Law.com Subscribers SAVE 30%

Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.

Cooperatives & Condominiums

By ljnstaff
February 01, 2017

Holder of Prior Mortgage Not Entitled to Surplus Funds Board of Managers of the Coronado Condominium v. Silva NYLJ 11/25/16 Supreme Ct., N.Y. Cty. (Bluth, J.)

In a condominium's action to foreclose a lien for common charges, purchaser of a first mortgage moved for an order directing the turnover of surplus funds. The court denied the motion, holding that the holder of a prior mortgage is not entitled to surplus funds.

The condominium board brought an action to foreclose its lien for unpaid common charges associated with the subject unit. At the foreclosure sale, the high bid was $490,000, leaving $59,590.52 in surplus money. The foreclosure sale purchaser bought title insurance from Fidelity in connection with its purchase. Fidelity, however, failed to discover a purchase money mortgage in the amount of $141,500. When it later discovered the lien, it purchased the mortgage to satisfy its contractual obligation to the foreclosure sale purchaser. Fidelity then moved in the foreclosure action to an order directing turnover of the surplus funds.

In denying Fidelity's motion, the court acknowledged Fidelity's dilemma. A prior mortgage survives a foreclosure sale, and ordinarily if the purchaser does not make payments on the mortgage, the mortgagee's remedy is foreclosure. In this case, however, Fidelity acknowledged that it was not entitled to foreclose on the purchaser, because it had insured the purchaser's title against any prior mortgages. Moreover, Fidelity had no claim on the original mortgage note, because the original unit owner had been discharged in bankruptcy. The court observed that if the foreclosure sale purchaser sought to recover the surplus money, Fidelity might then have a claim against the foreclosure sale purchaser based on its title insurance contract, but the court held that whether Fidelity would be entitled to recover on such a contract claim was beyond the scope of the foreclosure proceeding.

This premium content is locked for Entertainment Law & Finance subscribers only

  • Stay current on the latest information, rulings, regulations, and trends
  • Includes practical, must-have information on copyrights, royalties, AI, and more
  • Tap into expert guidance from top entertainment lawyers and experts

For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473

Read These Next
COVID-19 and Lease Negotiations: Early Termination Provisions Image

During the COVID-19 pandemic, some tenants were able to negotiate termination agreements with their landlords. But even though a landlord may agree to terminate a lease to regain control of a defaulting tenant's space without costly and lengthy litigation, typically a defaulting tenant that otherwise has no contractual right to terminate its lease will be in a much weaker bargaining position with respect to the conditions for termination.

How Secure Is the AI System Your Law Firm Is Using? Image

What Law Firms Need to Know Before Trusting AI Systems with Confidential Information In a profession where confidentiality is paramount, failing to address AI security concerns could have disastrous consequences. It is vital that law firms and those in related industries ask the right questions about AI security to protect their clients and their reputation.

Generative AI and the 2024 Elections: Risks, Realities, and Lessons for Businesses Image

GenAI's ability to produce highly sophisticated and convincing content at a fraction of the previous cost has raised fears that it could amplify misinformation. The dissemination of fake audio, images and text could reshape how voters perceive candidates and parties. Businesses, too, face challenges in managing their reputations and navigating this new terrain of manipulated content.

Authentic Communications Today Increase Success for Value-Driven Clients Image

As the relationship between in-house and outside counsel continues to evolve, lawyers must continue to foster a client-first mindset, offer business-focused solutions, and embrace technology that helps deliver work faster and more efficiently.

Pleading Importation: ITC Decisions Highlight Need for Adequate Evidentiary Support Image

The International Trade Commission is empowered to block the importation into the United States of products that infringe U.S. intellectual property rights, In the past, the ITC generally instituted investigations without questioning the importation allegations in the complaint, however in several recent cases, the ITC declined to institute an investigation as to certain proposed respondents due to inadequate pleading of importation.