Adam Leitman Bailey, P.C. Raises Technicality to Defeat Foreclosure, Swiftly Negotiates Large Buyout
When Adam Leitman Bailey P.C’s clients’ – a brother and sister – mother died, they inherited her 50% interest in a mortgage that their mother and her late husband, the clients’ stepfather, extended to a third-party, which was secured by a home on Rockaway Beach in Queens. Upon the stepfather’s death, the other 50% interest in the mortgage passed to the clients’ stepsiblings, who were the children of the clients’ stepfather from a prior marriage. Neither the client nor their stepsiblings ever lived in the home.
In 1990, the clients’ mother and their stepfather extended a four-year mortgage to the borrower/mortgagor. Thereafter, in 1994, when the mortgage become due and payable, the borrower had a large outstanding balance, which he was unable to satisfy. However, instead of foreclosing, a new note and thirteen-year mortgage was executed by the clients’ mother and their stepfather. In 2007, Adam Leitman Bailey, P.C.’s clients’ mother died.
In 2009, NYCTL, the holder of a tax lien started a foreclosure action in Queens Supreme Court seeking to foreclose on the subject property. However, NYCTL and the borrower stipulated to a stay of the foreclosure and entered into a forbearance agreement for the repayment of the outstanding taxes. Subsequently, the borrower defaulted on the forbearance agreement and NYCTL recommenced the foreclosure action. After the foreclosure action was resuscitated, the borrower then asserted a cross-claim seeking to extinguish the mortgage he had executed with Adam Leitman Bailey, P.C.’s clients arguing that the mortgage should be discharged pursuant to Section 1921 of the Real Property Actions and Proceedings Law because he purportedly paid off the entire mortgage. Adam Leitman Bailey, P.C. was able to successfully defeat the borrower’s claim by forcing the borrower to demonstrate that the mortgage indebtedness had been paid off, which the borrower admittedly had no record of. Absent any proof that the mortgage had been paid, the borrower’s satisfaction claim inevitably failed.
Then, on December 6, 2010, the Supreme Court issued an order granting NYCTL’s summary judgment in the foreclosure against the borrower, and directed NYCTL to settle the order on notice. Despite the court’s directive, because the borrower had been making partial payments under the forbearance agreement, NYCTL did not seek to settle the order on notice per the court’s directive until nearly three years later, when the borrower again stopped making payments.
Accordingly, Adam Leitman Bailey, P.C. filed papers with the court raising a technicality under court rules objecting to the late service and filing of NYCTL’s proposed order for entry, and submitted its own counter-order dismissing the matter outright. Adam Leitman Bailey, P.C. aptly pointed out that the uniform court rules provided that proposed orders that are submitted to the court for signature must be submitted within 60 days. If this 60-day time period is not satisfied, the underlying action shall be deemed abandoned unless good cause is shown, which must generally be proffered by way of an affirmation explaining the reasons for the delay. Adam Leitman Bailey, P.C. argued that NYCTL failed to establish good cause for its noncompliance with the 60-day time frame for the submission of an order because it failed to supply an affirmation of an individual with personal knowledge of the borrower’s alleged default under the forbearance agreement, which allegedly caused the delay. The court agreed with Adam Leitman Bailey, P.C.’s procedural arguments in dismissing NYCTL’s foreclosure action.
Shortly after such dismissal, Adam Leitman Bailey, P.C. diligently and expeditiously located a ready, willing and able third-party investor to purchase the clients’ 50% interest in the mortgage before NYCTL could re-file its foreclosure action. Adam Leitman Bailey, P.C. swiftly negotiated a favorable buyout and immediately drew up the requisite closing documents for the clients.
Adam Leitman Bailey, P.C. attorney Colin E. Kaufman handled the matter.