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Adam Leitman Bailey, P.C. Protects Innocent Home Buyers Against Claim of Seller’s Business Lender

By William J. Geller


Soon after a couple bought a home in Norwalk, Connecticut, they were served with a summons from federal District Court in Brooklyn. The Buyers learned that they were being sued by a lender to the family business of the woman that sold them the home. The lender claimed that the Buyers were responsible for the Seller’s debts because of an unusual “Payment Agreement” filed in the Norwalk, Connecticut land records. Adam Leitman Bailey, P.C. was retained to protect the Buyers’ interests, and aggressively moved to dismiss the action against the Buyers on several grounds.

First, ALBPC argued that the Brooklyn court did not have personal jurisdiction over the Connecticut-resident buyers, as even though the seller entered into loans in New York with the New York-based lenders, jurisdiction over the Buyers was lacking because the Buyers did not have sufficient “minimum contacts” with New York to support jurisdiction under the U.S. Constitution and, therefore, could not be sued under New York’s “long arm” statute governing claims against non-residents.

Second, ALBPC argued that the claims against the Buyers’ Connecticut home could not be decided by a New York federal court under the “local action doctrine,” which holds that courts in one state cannot determine matters concerning title to real estate in another state. Tracing the doctrine back to its roots in the English Common Law, ALBPC cited an 1811 decision by Chief Justice John Marshall involving land claims against President Thomas Jefferson.

Third, ALBPC argued that the claims had no legal merit. The Payment Agreement was signed by the husband of the Seller (who previously held title to the home), but was not executed by the Seller herself, who was record owner of the home when the Payment Agreement was signed. Therefore, the recorded Payment Agreement was outside of the home’s “chain of title” and, thus, not a valid lien against the home under Connecticut law. ALBPC also argued that because the Seller’s obligations under the Payment Agreement were not triggered until a date after the closing date of the home sale, the Buyers were not required to ensure that the lender was paid from the sale proceeds.

After being served with our multi-pronged motion, the lender elected not to oppose it, but instead voluntarily dismissed his claims against the Buyers, giving them a clear victory without having to wait for the Court to even decide the motion.

William J. Geller, Esq. and Jackie Halpern Weinstein, Esq. of the Title Litigation, Foreclosure, and Bankruptcy / Creditor’s Rights Groups at Adam Leitman Bailey, P.C. devised and implemented the strategy that secured this expedited victory for the Buyers.

Adam Leitman Bailey, P.C.

NEW YORK REAL ESTATE ATTORNEYS