Cooperatives & Condominiums

Appointment of Receiver

U.S. Bank National Association v. Sacher

NYLJ 5/16/13, p. 21, col. 1

Supreme Ct., N.Y. Cty.

(Jaffe, J.)

In a foreclosure action against a condominium unit, condominium board moved for an order appointing a temporary receiver for the unit. The court granted the motion over the foreclosing bank's objections, holding that the condominium was entitled to appointment of a receiver to rent the unit during the pendency of the foreclosure proceedings.

Unit owner took out two mortgage loans on the subject unit on Oct. 5, 2006, one for $455,000 and the second for $130,000. Unit owner defaulted in March 2007, and the bank, as assignee of the loans, brought this action to foreclose the first mortgage in June 2007. The bank moved for summary judgment, but in October 2007, Supreme Court denied the motion for failure to include an assignment from the original mortgagee and for failure to serve a notice at the proper address.

Mortgagee renewed its summary judgment motion in November 2009, but on Dec. 13, 2010, the court again denied the motion without prejudice upon proof of compliance with the Administrative Order of the Chief Administrative Judge relating to residential foreclosures. Meanwhile, unit owners have received a discharge in bankruptcy, and the current value of the premises is smaller than the amount of the first mortgage lien. On those facts, the condominium sought appointment of a receiver because due to failure of the bank to proceed on the foreclosure action, the size of the condominium board's lien has continued to grow, with no prospect of payment because the lien is subordinate to the bank's lien.

The court granted the condominium board's motion, rejecting the bank's argument that the condominium's bylaws gave the board no authority to seek appointment of a receiver. The court relied on CPLR 6401, which authorizes appointment of a temporary receiver where there is danger that property will be lost, materially injured, or destroyed. The court indicated that the bank would not be prejudiced as it would receive rental income while the foreclosure is pending and the receiver would be directed to rent out the unit only for a limited period of time. The court then concluded that the mortgagee was now entitled to summary judgment on its action to foreclose the
$455,000 mortgage.

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Appointment of Receiver

U.S. Bank National Association v. Sacher

NYLJ 5/16/13, p. 21, col. 1

Supreme Ct., N.Y. Cty.

(Jaffe, J.)

In a foreclosure action against a condominium unit, condominium board moved for an order appointing a temporary receiver for the unit. The court granted the motion over the foreclosing bank's objections, holding that the condominium was entitled to appointment of a receiver to rent the unit during the pendency of the foreclosure proceedings.

Unit owner took out two mortgage loans on the subject unit on Oct. 5, 2006, one for $455,000 and the second for $130,000. Unit owner defaulted in March 2007, and the bank, as assignee of the loans, brought this action to foreclose the first mortgage in June 2007. The bank moved for summary judgment, but in October 2007, Supreme Court denied the motion for failure to include an assignment from the original mortgagee and for failure to serve a notice at the proper address.

Mortgagee renewed its summary judgment motion in November 2009, but on Dec. 13, 2010, the court again denied the motion without prejudice upon proof of compliance with the Administrative Order of the Chief Administrative Judge relating to residential foreclosures. Meanwhile, unit owners have received a discharge in bankruptcy, and the current value of the premises is smaller than the amount of the first mortgage lien. On those facts, the condominium sought appointment of a receiver because due to failure of the bank to proceed on the foreclosure action, the size of the condominium board's lien has continued to grow, with no prospect of payment because the lien is subordinate to the bank's lien.

The court granted the condominium board's motion, rejecting the bank's argument that the condominium's bylaws gave the board no authority to seek appointment of a receiver. The court relied on CPLR 6401, which authorizes appointment of a temporary receiver where there is danger that property will be lost, materially injured, or destroyed. The court indicated that the bank would not be prejudiced as it would receive rental income while the foreclosure is pending and the receiver would be directed to rent out the unit only for a limited period of time. The court then concluded that the mortgagee was now entitled to summary judgment on its action to foreclose the
$455,000 mortgage.

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