Eviction After Foreclosure, Holdovers Still Saying “You Can’t Catch Me”


1 October, 2020


Mortgage Lender and Servicer Alerts

Eviction after foreclosure continues to remain one of the more mysterious aspects of the foreclosure process, mainly for lenders and servicers, although to some extent as well generally for bidders at foreclosure sales.  Lenders, after all, only need encounter whatever this is all about if the foreclosure actually goes to a conclusion (obviously many do not) and no one buys at the sale, whereby it is the foreclosing lender which succeeds to title.  Once the lender owns the property, should the borrower or others continue to remain in possession, then the lender as new owner needs to obtain possession, that is dispose of the holdovers.  So they will confront the situation only a minority of times, hence the mention that it is predominantly an arcane arena.

Indeed, this characterization is buttressed by there being two different methodologies to pursue the obtaining of possession.  But lest this review go beyond the singular message of the alert, we focus upon the perhaps more common landlord and tenant court approach in civil, district or justice courts.

There is a particular statute in New York (RPAPL §713) which addresses those unusual cases where there is no landlord and tenant relationship between the owner of the property and the person residing there.  Such a situation occurs after a foreclosure sale.  The person holding over is not a tenant of the new owner – from our perspective here the lender – so it is RPAPL §713(5) which presents the procedure to obtain possession.

One of its directives is that a copy of the deed as certified (the deed to the lender from the foreclosure sale) must be “exhibited” to the holdover.  That is hardly an innocuous word under the circumstances.  Indeed, some landlord and tenant parts had ruled that exhibited means actually displaying the deed to the eyes of the person.  While from a definitional point of view that is not irrational, from a practical standpoint it is the source of serious problems.  If the only way someone can be evicted after foreclosure is if they are actually found, in person, and the deed is held up to their face, it encourages the recalcitrant to avoid being located.  A holdover who wished to remain in possession forever would go into hiding.  They certainly would not come to the door and allow someone to accomplish the display of the deed.

What was always particularly incongruous about this was that service of the actual eviction pleadings need not have been handed directly to a person.  Rather, they could be given to some person of suitable age and discretion followed by a mailing, or by affixing to the door with a mailing.  The exquisite anomaly, then, was that while process service, jurisdiction, can be by any of these methods, the exhibition of the deed was elevated to a much higher level, requiring absolutely being in the presence of the holdover tenant.

This was illogical to us and we railed against it any number of times in published articles and a few of the lower courts adopted our view that it made no sense to have to display the deed in order to succeed with an eviction.  The cases remained mixed at best and always presented a problem whenever a holdover was wily enough to remain hidden.  Ultimately, the Appellate Term (a court just above the landlord and tenant parts) saw the light and sagely ruled that substituted service of the deed was effective [See Plotch v. Dellis, 60 Misc. 3d 1, 75 N.Y.S.3d 779 [App. Term, 2d Dept., 2d, 11th & 13 Jud. Dists. 2018].

Although finally the law had apparently been clear in this regard, did that mean that holdovers would now abandon the defense and go into the night a bit more quietly?  No.

And so it had to be faced anew in a recent case, U.S. Bank Trust, N.A., as Trustee for LSF8 Master Participation Trust v. Hayes, 62 Misc.3d 980, 94 N.Y.S.3d 809 (City Ct. 2019).

There, a copy of the deed to be exhibited was held satisfied where as part of the substituted service of the pleadings, a certified copy of the deed was left at the premises with a person of suitable age and discretion.  Thus, the court ruled service by means other than personal delivery of the certified copy of the deed, that is service of the certified copy of the deed left at the premises for the holdover to retain and examine, satisfies the exhibition requirement.  This, the court held, is now deemed acceptable service.

So the point has been made, again, and even more strongly.  Lenders and servicers who may succeed to title and will need to obtain possession can hope that perhaps this thorny defense will no longer be a time waster, although there is no guarantee in that regard.  That the defense will, however, be banished if raised is more certain.


Mr. Bergman, author of the four-volume treatise, Bergman on New York Mortgage Foreclosures, LexisNexis Matthew Bender (rev. 2019), 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.