The United States District Court for the Southern District of New York recently granted a lender’s motion for summary judgment on a strict foreclosure claim against a junior lienholder not named in a foreclosure action. See U.S. Bank Nat’l Ass'n as Tr. for Structured Adjustable Rate Mortg. Loan Tr., Mortg. Pass-Through Certificates, Series 2005-23 v. Haskins, 2019 WL 6888654 (S.D.N.Y. Dec. 18, 2019). The original lender holding a mortgage on a property commenced a foreclosure action and, in connection with the action, recorded a notice of pendency in February of 2011. The notice expired after three years, and the lender did not refile a notice until April of 2014, creating a gap in the notice period from February of 2014 through April of 2014. In March of 2014, the defendant filed a judgment lien against the property. The mortgage eventually was assigned to plaintiff, who finalized the foreclosure and purchased the property at the referee sale. Plaintiff then brought this strict foreclosure action against defendant under RPAPL 1352, seeking an order that defendant must redeem its right to the property or have its lien extinguished. The parties cross-moved for summary judgment.
The Court granted plaintiff’s motion. First, the Court found that there was no question that defendant’s lien was junior to plaintiff’s mortgage, but that defendant’s lien survived the foreclosure sale and remained a lien on the property due to the fact it was recorded during the gap period. Second, it found that a strict foreclosure action under RPAPL 1352, unlike a reforeclosure under RPAPL 1503, does not require the plaintiff to prove the absence of fraud or willful neglect. Thus, defendant’s claims that plaintiff was negligent in failing to re-record the notice of pendency were irrelevant in this strict foreclosure action. The Court therefore granted plaintiff’s motion for summary judgment, denied defendant’s cross-motion, and ordered that defendant had a “60-day period from the date of this Opinion & Order within which Defendant must notify Plaintiff of his intent to exercise his right of redemption and pay the mortgage debt, along with the value of improvements made to the Property, to maintain his interest in the Property.”