Possible Remedy When Borrower Delays Or Runs Up Legal Fees In Foreclosure (Judiciary Law §487)
It happens too frequently for a lender’s taste: in defending a foreclosure the borrower dissembles, delays interminably and generally abuses the system in a desperate attempt to slow down, halt or defeat the action. In addition to creating undue interest accrual attributable to the delay period, the lender incurs substantial legal expense. This leads to lender incredulity and the oft-asked question, can’t anything be done about this?
The answer is difficult and too often dismaying.
Yes, legal fees are almost invariably an element of recovery in a foreclosure action but courts tend to be stinting in making such awards, particularly in residential cases.
Yes, sanctions for frivolous conduct are available (pursuant to 22 NYCRR §130-1.1), but in the real world, courts are reluctant to declare sanctions. [For more on the legal aspects of this see 2 Bergman on New York Mortgage Foreclosures §21/09, LexisNexis Matthew Bender (rev. 2016)].
The possible help can be found in Judiciary Law §487 highlighted in a recent case where a foreclosing plaintiff was damaged through incurrence of legal fees because of the borrower’s lawyer’s conduct in the action. [Kimbrook Rte. 31, L.L.C. v. Bass, 2017 N.Y. App. Div. LEXIS 1116]. This applies if it is the lawyer for the borrower who violated the standards. The section provides in relevant part:
“An attorney…who:
- Is guilty of any deceit or collusion, or consents to any deceit or collusion, with an intent to deceive the court or any party; or,
- Willfully delays his client’s suit with a view towards his own gain…
forfeits to the party injured treble damages to be recovered in a civil action.”
It may in most cases be difficult to discern that the deceit or delay is directly attributable to the attorney rather than the client, but sometimes it is glaring that liability rests with the attorney. There can of course be nuance to all this, but in sum, a plaintiff can sue the attorney in a separate action for damages by virtue of the conduct violative of Judiciary Law §487.
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.