Opinion
18643-04.
Decided on October 9, 2007.
By order to show cause filed with the Kings County Clerk's office (KCC) on March 22, 2006, proposed intervenor Raymond Mordekhai (Mordekhai) moves pursuant to CPLR § 1012(a)(3) for an order permitting his intervention in the instant action. Mordekhai also seeks an order restoring the action to active status, directing the referee to give him a credit for one half of the transfer taxes due on closing, setting the referee's fee at two thousand six hundred and twenty five dollars ($2,625.00) and approving a stipulation (hereinafter the subject agreement) entered into by Mordekhai, the plaintiff and the referee. Only defendants, Jamilla Reavis Bey and Silia Reavis Bey oppose the motion.
The Complaint
On June 18, 2004, plaintiff commenced the instant action by filing a summons and complaint with the KCC. Theron Reaves Davis seeks the partition and sale of real property he owns with the defendants located at 679 St. Marks Avenue, Brooklyn, New York (hereinafter the subject property). On July 15, 2004, defendants joined issue by filing their answer.
On February 17, 2005, plaintiff moved, inter alia, for summary judgment of partition and sale for the subject property. On April 8, 2005, the date set for oral argument, the defendants consented to the relief requested and the court issued an order granting same. Pursuant to the aforementioned order of this court, dated April 8, 2005, the court issued a judgment of partition dated August 4, 2005.
Motion Papers
Mordekhai's motion papers consist of an affirmation of his counsel, a proposed answer to the complaint and six annexed exhibits. Exhibit A is the judgment of partition for the subject property signed by this court on August 4, 2005. Exhibit B is the Memorandum of Sale, reflecting Mordekhai's successful bid and purchase of the subject property on October 20, 2005, for three hundred and ninety five thousand dollars ($395,000.00). Exhibit C is the terms of sale signed on October 20, 2005 by Roberta Askin, the referee. Exhibit D consists of sixteen Environmental Control Board (ECB) violation details on the subject property taken from the New York City Department of Buildings' internet site. Exhibit E purports to be a list of various ECB judgments on the subject property. Exhibit F is the subject agreement between Mordekhai, the plaintiff and the referee.
By an affirmation of their counsel, the defendants raise two arguments in opposition to Mordekhai's motion. First, they contend that the terms of sale of the subject property are not consistent with the judgment of partition and sale. Second, they contend that the subject agreement is not enforceable because they were not a party to it. Furthermore, they advise that their assent to the subject agreement is unlikely without a satisfactory allocation of responsibility for the real estate taxes and maintenance costs on the subject property since the closing.
LAW AND APPLICATION
CPLR § 2104. Stipulations. Provides as follows:
An agreement between parties or their attorneys relating to any matter in an action, other than one made between counsel in open court, is not binding upon a party unless it is in a writing subscribed by him or his attorney or reduced to the form of an order and entered. With respect to stipulations of settlement and notwithstanding the form of the stipulation of settlement, the terms of such stipulation shall be filed by the defendant with the county clerk.
Real Property Action and Proceedings Law § 1354 provides for the distribution of proceeds of sale as follows:
1. The officer conducting the sale shall pay, out of the proceeds, unless otherwise directed, the expenses of the sale, and pay to the plaintiff, or his attorney, the amount of the debt, interest and costs, or so much as the proceeds will pay and take the receipt of the plaintiff, or his attorney, for the amount so paid, and file the same with his report of sale.
2. The officer conducting the sale shall pay out of the proceeds all taxes, assessments, and water rates which are liens upon the property sold, and redeem the property sold from any sales for unpaid taxes, assessments or water rates which have not apparently become absolute. In any city having a population of three hundred thousand or more or any city having a population between one hundred twenty-five thousand and one hundred seventy-five thousand, such officer shall pay out of the proceeds any liens or incumbrances placed by a city agency upon the real property which have priority over the foreclosed mortgage. The sums necessary to make those payments and redemptions are deemed expenses of the sale. The provisions of this subdivision shall not apply to any judgment in an action wherein any municipal corporation of this state is the plaintiff and the purchaser at the foreclosure sale thereunder.
3. The officer conducting the sale after fully complying with the provisions of subdivisions one and two of this section and if the judgment of sale has so directed shall pay to the holder of any subordinate mortgage or his attorney from the then remaining proceeds the amount then due on such subordinate mortgage, or so much as the then remaining proceeds will pay and take the receipt of the holder, or his attorney for the amount so paid, and file the same with his report of sale.
4. All surplus moneys arising from the sale shall be paid into court by the officer conducting the sale within five days after the same shall be received.
CPLR § 1012(a)(3) provides in pertinent part as follows:
Upon timely motion, any person may be permitted to intervene in any action when he action involves the disposition or distribution of, or the title or a claim for damages for injury to, property and the person may be affected adversely by the judgment.
Mordekhai's motion to intervene is granted pursuant to CPLR 1012(a)(3). However, the remainder of the order to show cause is denied for the following reasons. The judgment of partition dated, August 4, 2005, provided that the referee shall pay from the proceeds of the sale "taxes, assessments, sewer rents, or water rates which are or may become liens on the premises at the time of sale with such interest or penalties which may become liens on the premises at the time of sale with such interest or penalties which may have lawfully accrued thereon to date of payment." The judgment further provided that "the premises are to be sold in one parcel in as is' physical condition, subject to . . . prior liens of record if any except those liens set forth in RPAPL 1354."
In conjunction with the sale of the property, the "terms of sale" was drafted by the referee. The terms of sale provided in paragraph "5th" that "[a]ll taxes, assessments; water rates and other encumbrances which, at the time of the public auction, are liens upon said Premises, will be paid by the Referee." However, the terms of sale further provided in paragraph "13th(e)" that the property "will be sold subject to. . . . [p]rior mortgages or judgments or liens of record." This provision is similar to the language in the judgment as stated above, however it fails to include the exception with respect to the RPAPL 1354 liens (i.e. taxes, assessments, water rates and/or liens or encumbrances, etc.).
Therefore, on its face, the terms of sale contains conflicting provisions with respect to which party was responsible for paying certain outstanding Environmental Control Board (EBC) violations on the property which Mordekhai asserts constituted "encumbrances" and "liens." As a result of the discrepancy, a stipulation was executed between the referee, Mordekhai and plaintiff which provided, inter alia, that Mordekhai would take title to the property subject to the violations, but would receive a credit for one half (½) of the present value of the violations. The parties also agreed that Mordechai and the referee would each be responsible for paying one-half (½) of the transfer taxes due at closing, as responsibility for the payment of those taxes was not addressed in the judgment or terms of sale. Mordekhai now moves by order to show cause to intervene in this action and for approval of the stipulation and enforcement of its terms
Since the stipulation is not subscribed by the other two interest holders of the partitioned property, defendants Jamilla Reavis Bey and Sylvia Reavis Bey, the stipulation is not enforceable against their interests (CPLR § 2104; see also Bonnette v. Long Island College Hospital, 3 NY3d 281, 285).
More significantly, the referee "is an agent of the court, a mere ministerial officer" appointed to conduct a judicial sale in the foreclosure action of the property ( Matter of O'Brien v Spitzer , 24 AD3d 9, 11-12, revd on other grounds 7 NY3d 239). "Any effort on the part of the referee to alter the terms of sale fixed by the judgment of foreclosure is void and the court, in its broad supervision and control over all judicial sales, may reform such a sale to correct the substantial errors or unauthorized acts of the referee'" ( Matter of O'Brien, 24 AD3d at 12) (internal citation omitted). "[I]t is the court, not the parties, who is in absolute control of the workings of a judicial foreclosure . . . The appointed Referee is an officer of the court and must perform his duties impartially without regard to the interests of any particular person in the proceeding" ( Natl. Bank of Stamford v VanKeuren, 184 AD2d 92, 95; Harbor Financial Mtg. Corp. v Hurry, 277 AD2d 693, 694).
Therefore, the referee is not authorized to close title in accordance with the terms of the stipulation, which clearly deviate from the judgment.
The terms of sale are inconsistent with the judgment to the extent that paragraph "13th (e)" of the terms of sale, which states that the property "will be sold subject to. . . . [p]rior mortgages or judgments or liens of record" neglects to provide an exception with respect to the RPAPL 1354 liens. It is not clear if this omission is merely a scrivener's error. Nonetheless, terms of sale which vary from the judgment [of sale] are void ( see Renaissance Complex Redevelopment Corp. v Renaissance Associates, 255 AD2d 274; Albany Sav. Bank v David Thum Realty, Inc., 97 AD2d 891). As the terms of sale are substantively incompatible with the judgment, the sale must be vacated.
Finally, with respect to transfer taxes, the court notes that "[w]here the written contract between the referee and the highest bidder does not contain an agreement that the purchaser will pay the tax, and there is no clause relieving the referee from doing so, the referee has the obligation to pay such taxes out of the proceeds of the sale" ( Trefoil Capital Corp., 125 Misc 2d 152, 156, revd on other grounds 121 AD2d 874).
The sale of the property is hereby set aside and the referee shall notice a resale.
The foregoing constitutes the decision and order of the court.