Real Property Law

In affirming, the Appellate Division majority held that use of the standard form real estate contract reflected the parties' intent to embrace the common practice in the industry with respect to real estate closing. That practice requires the seller to obtain payoff letters from mortgagees, and requires purchaser to bring bank checks payable to each lender, with seller's counsel or a title insurance agent then processing those checks to obtain satisfaction of the mortgages. Seller followed that practice in this case, so that even if the mortgage lien remained on the property at the moment of closing, purchaser had adequate assurance that if she made the payments to mortgagees, the mortgage liens would quickly be eliminated.

Justice Mulvey dissented in part because he concluded that the parties should be bound by the contract they signed, whatever the common practice in the industry might be. Because the mortgage liens would remain on the books at the time of closing, seller had breached her obligation to provide an unbreached warranty deed with lien covenant.

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Statute of Limitations Bars Foreclosure Claim

Bank of New York v. Yacoob NYLJ 5/1/20, p. 28, col. 1, AppDiv, Second Dept. (memorandum opinion)

In an action to foreclose a mortgage, mortgagor appealed from Supreme Court's denial of her summary judgment motion. The Appellate Division reversed, holding that the statute of limitations barred the foreclosure action.

Mortgagee brought a foreclosure action on April 18, 2008. In the complaint, mortgagee elected to accelerate the balance of the mortgage debt.IN 2010, mortgage filed a stipulation discontinuing the action without prejudice. Mortgagee filed a second stipulation of discontinuance in 2012. On October 14, mortgagee's successor in interest, current plaintiff, filed a foreclosure action. Mortgagor moved to dismiss based on the statute of limitations. Supreme Court denied the motion, holding that the discontinuance constituted a revocation of the election to accelerate. Mortgagor appealed.

In reversing, the Appellate division held that because the stipulation of discontinuance was silent on acceleration and did not otherwise indicate that mortgagee would accept installment payments, the stipulation did not, by itself, constitute an affirmative act revoking the acceleration. As a result, mortgagor was entitled to summary judgment dismissing the action non statute of limitations grounds.

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Statute of Limitations Did Not Extinguish Mortgage

Vitolo v. U.S. Bank National Association NYLJ 5/1/20, p. 28, col. 5 AppDiv, Second Dept. (memorandum opinion)

In mortgagor's action to cancel and discharge a mortgage, mortgagor appealed from Supreme Court's grant of mortgagee bank's summary judgment motion. The Appellate Division affirmed, holding that the statute of limitations had not extinguished the mortgage.

Mortgagor allegedly defaulted on her monthly mortgage payments beginning in December 2008. The following month, mortgagee bank sent a notice indicating that unless payments were brought current by February 24, "it will become necessary to accelerate" the mortgage note. The letter also provided that if funds were not received by that date, "we will proceed to automatically accelerate your loan." In May 2009, the bank brought a foreclosure action, which was dismissed on Jan. 11, 2016 for lack of standing. In August, mortgagor brought this action to cancel and discharge the mortgage, contending that the statute of limitations had expired. Supreme Court granted summary judgment to mortgagee.

In affirming, the Appellate Division concluded that the January 2009 letter did not accelerate the mortgage debt, and did not therefore trigger the running of the statute of limitations. The court concluded that the letter was merely an expression of future intent that fell short of an acceleration. As a result, mortgagor was not entitled to discharge.