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Lender's Choice In Naming Defendants Is Under Assault

By Bruce J. Bergman
February 01, 2018

Can a foreclosing plaintiff choose whom to name as a party defendant in a foreclosure action? In New York, in the absence of prejudice to the defaulting property owner, the answer is yes. Although a recent holding of New York's Appellate Division, Second Department, tacitly suggests “no,” the case may not have addressed the actual controlling principles.

In NYCTL 2012-A Trust v. Phillip, 145 A.D.3d 684 (2d Dept. 2016), the court affirmed denial of an ex-parte order of reference on the ground that the plaintiff refrained from serving tenants. This could be a dangerous precedent and can threaten the orderly progress of foreclosure cases in New York — actions already unduly burdened with delays and minefields.

What precisely did the case say, how might the ruling create problems, and what are the maxims urging that the holding may be off the mark?

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