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Lender's Choice In Naming Defendants Is Under Assault

By Bruce J. Bergman

Can a foreclosing plaintiff choose whom to name as a party defendant in a foreclosure action? In New York, in the absence of prejudice to the defaulting property owner, the answer is yes. Although a recent holding of New York's Appellate Division, Second Department, tacitly suggests “no,” the case may not have addressed the actual controlling principles.

In NYCTL 2012-A Trust v. Phillip, 145 A.D.3d 684 (2d Dept. 2016), the court affirmed denial of an ex-parte order of reference on the ground that the plaintiff refrained from serving tenants. This could be a dangerous precedent and can threaten the orderly progress of foreclosure cases in New York — actions already unduly burdened with delays and minefields.

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