We have made this point a number of times over the years in our alerts; process service can silently be one of the most time consuming parts of the foreclosure process in judicial foreclosure states. It can also be one of the most dangerous when a defaulting defendant (typically the borrower) surfaces on the eve of sale to claim “I was never served”. Even worse is the party who emerges after the foreclosure sale claiming lack of service.
This is, one might say, a problem for the attorneys (and their process servers) to worry about. True enough, but if despite their efforts, proper service is not made, then disaster lurks. This is confirmed yet again by a new case in New York [Bank One National Association v, Osorio, 26 A.D.3d 452, __ N.Y.S.2d __ (2d Dept. 2006)].
The technical – but practical – point to note is that parties in an action must be served either at their regular place of abode or their place of business. In the new case, the borrower and others came forward after the foreclosure sale saying they had not been served at all and that was the reason for their default. On appeal, the court found that indeed the address at which they were served was neither where they lived nor where they worked. That made the service no good and in turn was a basis to vacate the foreclosure sale and throw the case back to the very beginning – a serious result to be sure.
The case does not tell us whether the address at which these people were served was what was in the file or what the attorney’s process server had uncovered. If despite everyone’s best efforts the protesting parties simply could not be found, then this fiasco is one of those things that just happens in foreclosure actions. But if the servicer’s file might have revealed better information about a residence or a place of business, it might have saved the day. So, one helpful thought is that should a servicer’s file reveal anything about a borrower’s whereabouts – perhaps a phone call or a return address on an envelope – it could be quite critical. We are mindful that such information may not always be preserved, but it is a point to bear in mind.
Mr. Bergman, author of the four-volume treatise, Bergman on New York Mortgage Foreclosures, LexisNexis Matthew Bender (rev. 2017), is a partner with Berkman, Henoch, Peterson, Peddy & Fenchel, P.C. in Garden City, New York. He is also a member of the USFN, The American College of Real Estate Lawyers, The American College of Mortgage Attorneys, an adviser to the New York Times on foreclosure issues and writes a regular servicing column for the New York Law Journal. He is AV rated by Martindale-Hubbell, his biography appears in Who’s Who In American Law and he has been for years listed in Best Lawyers In America and New York Super Lawyers.