Real Property Law

In an action to foreclose a mortgage, mortgagee appealed from Supreme Court's grant of a subsequent mortgagee's summary judgment motion. The Appellate Division modified to deny summary judgment to both parties, holding that questions of fact remained about whether the subsequent mortgagee had actual notice of the prior, improperly recorded, mortgage.

In 2005, mortgagor borrowed $500,000 from Washington Mutual, the foreclosing mortgagee's predecessor in interest, secured by a mortgage that included the parcel's correct street address, but described the parcel as Lot 8, when the correct lot number was Lot 7. The loan proceeds were used to satisfy a prior mortgage, and the mortgage was recorded against Lot 8. Three years later, mortgagor opened a home equity line of credit with another bank. The line of credit was secured by a mortgage that was correctly recorded against Lot 7. After the subsequent mortgage was recorded, a corrected Washington Mutual mortgage was recorded against Lot 7. Washington Mutual's successor subsequently commenced this foreclosure action. Subsequent mortgagee moved for summary judgment on the ground that its correctly recorded mortgage was senior to the Washington Mutual mortgage. Supreme Court granted subsequent mortgagee's motion, and U.S. Bank, current holder of the Washington Mutual mortgage, appealed.