Adam Leitman Bailey, P.C. Protects U.S. Bank, N.A’s Mortgage from a Condominium Common Charge Lien Foreclosure Sale
In Bd. of Mgrs. of Regent’s Park Gardens Condominium v. US Bank, N.A., et. al., a decision and order was won in favor of U.S. Bank, N.A., defeating a motion, brought by the high bidder of a property in Queens at a common charge lien foreclosure sale, seeking to extinguish U.S. Bank’s mortgage, despite it being the first open mortgage of record.
Pursuant to Real Property Law § 339-z, the “first mortgage of record” secured by a property gets to survive a common charge lien foreclosure sale. In other words, a common charge lien foreclosure sale does not extinguish the first mortgage of record—but, rather, the high bidder takes the property subject to that first mortgage.
In this case, however, even though U.S. Bank held the first open mortgage of record, there was a prior mortgage that, although fully satisfied, still remained open of record in the chain of title. The high bidder used this circumstance to argue that U.S. Bank technically held the second mortgage of record, and, therefore, should be extinguished as a result of the sale.
In a decision and order dated October 18, 2013, Judge Bernice D. Siegel, J.S.C. agreed with Adam Leitman Bailey, P.C. and held that U.S. Bank’s mortgage should not be extinguished because the bidder “is charged with notice” of U.S. Bank’s mortgage, per both the terms of sale and the judgment of foreclosure and sale, which both expressly stated that the property would be transferred subject to prior, outstanding mortgages. The high bidder was not permitted to work the system and knowingly extinguish the mortgage based on a technicality.
The Title Litigation Group at Adam Leitman Bailey, P.C. won this case for the insured with Jackie Halpern Weinstein representing the firm on the case.