Eviction After Foreclosure – The Continuing Problem


1 July, 2011


Mortgage Lender and Servicer Alerts

Eviction after foreclosure is a particularly frustrating realm of delay and confusion which a foreclosing lender or servicer too often encounters when the years consumed by a New York mortgage foreclosure action finally end.  The borrower who managed to delay the foreclosure interminably (abetted by law and procedure which assure that foreclosures proceed glacially) is free to repose at the foreclosed premises in comfort for whatever the course of legal process to take away that possession.  This would apply as well to any tenants of the former mortgagor owner.  (None of this takes into account the related concept that anyone with a lease is now allowed to remain at foreclosed premises for the duration of that lease.)

A new case -and at an appellate level – now emphasizes the burden borne by the foreclosure sale purchaser (such as the lender) in trying to gain possession of the property it owns. [Home Loan Services, Inc. v. Moscowitz, 2011 WL 564751 (N.Y. Sup. App. Term)]

This discussion will sound technical, but it is profoundly practical.  The key to the new case, to be explained of course, is that when pursuing eviction by one of the two paths available (a special proceeding in a landlord tenant court) a pre-condition is that the referee’s deed be exhibited to the person from whom possession is sought.  That does not mean attaching it to a notice to quit.  It means displaying it before their eyes.  The ultimate problem is that person who declines to return possession is often unlikely to make themselves available for this mandated exhibiting exercise.

So, this obligation to “exhibit” the deed as a prerequisite to eviction after foreclosure [under RPAPL §713(5)] creates serious practical problems and effects the decision in selecting a methodology to evict.

Proceeding pursuant to the other available method [under RPAPL §221] is a matter in the foreclosure action, in Supreme Court, under the foreclosure caption.  The judge who presided over the foreclosure will rule on possession which may, or may not, be viewed as welcome by the plaintiff.  If the foreclosure judgment (prepared by the plaintiff) does not mandate “exhibition” of the referee’s deed to any holdovers – “delivery” or “annexation” should suffice – then there should be no compulsion to actually display the deed before the eyes of the holdovers.  The concern with cases in Supreme Court is time and delay.  Calendars and congestion are such in some counties that orders can be held up for undue months, a problem when holdovers are living free and the foreclosure sale bidder is deprived possession of its property.

Proceeding in “landlord-tenant” court (civil court, district court, city or village court or justice court depending upon the community in which the property is situate) elicits a special proceeding.  That has the potential to be much faster, at least in theory.  Whether such a court is a preferred venue from the new owner’s point of view will vary from jurisdiction to jurisdiction and is a decision local counsel will need to address.

Even assuming that the potential of rapid resolution is achievable in the landlord tenant venue, there is still the problem of exhibiting the deed, mandated by RPAPL §713(5) – in contradistinction to RPAPL §221.  If exhibit means to actually display the referee’s deed to the person’s eyes, then finding that individual in person is essential.  That means, however, that all a holdover would need to do to avoid having to surrender possession is to hide.  If the process server cannot approach the person, the deed cannot be exhibited.  While an ameliorative court order might solve the dilemma, even if such a course exists, the advantage of time pursuant to RPAPL §713(5) would then likely prove to have been illusory.  Of course, the party seeking possession may not know in advance how difficult it will be to personally find holdovers so as to initiate the display dance.

In the end, there certainly are factors to consider, but with no sure answer.  The new case in any event gives pause in selecting what might otherwise be viewed as the more efficient approach.

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.