Opinion
101744/06.
Decided March 12, 2008.
Upon the foregoing papers, the motion (No. 3173) by plaintiffs in Action No. 1, Gaspare Gibaldi and Jane Limperpulos, is decided as follows. The cross motion (No. 3405) for summary judgment by plaintiff in Action No. 2, HSBC Bank USA, N.A. (hereinafter "HSBC"), which was granted in a Decision and Order of this Court dated January 15, 2008, will be treated as an affirmation in opposition for the purpose of deciding this motion.
To the extent relevant, Action No. 1 sounds in breach of contract. Action No. 2 is to foreclosure of a mortgage. The only issue tendered on this motion is one of priority between the recorded contract of sale underlying Action No. 1 and the mortgage underlying Action No. 2.
On November 8, 2005, plaintiffs Gibaldi and Limperpulos entered into a contract (HSBC's Exhibit "B") with defendant Michael Daniell to purchase the property known as 380 Aspen Knolls Way, Staten Island 10312. Attached to the contract are two certifications (HSBC's Exhibit "C") executed by a notary public under date of January 5, 2006. The first purports to validate Gibaldi's signature, while the second confirms that "Gibaldi, the subscribing witness to the foregoing instrument. . . saw Janet Limpropulos and Michael Daniell execute the same". The contract of sale along with both certifications was recorded with the County Clerk on January 26, 2006.
It is undisputed that the vendor in Action No. 1, defendant Michael Daniell, did not appear at the scheduled closing on February 1, 2006, and is in breach of the contract. Soonafter, i.e., on or about February 9, 2006, Daniell transferred the property to himself and his wife, defendant Nancy Daniell. The deed reflecting same was recorded on March 31, 2006. At or about the same time, the Daniells refinanced the subject property. The resulting mortgage was recorded on March 31, 2006, and was subsequently assigned to plaintiff in Action No. 2, HSBC, which commenced foreclosure proceedings and filed a notice of pendency on November 6, 2006. On December 22, 2006, plaintiffs obtained an order for specific performance in Action No. 1 against defendant Michael Daniell, and filed a notice of pendency on January 24, 2007.
A letter dated February 15, 2006 indicates that Gibaldi and Limperpulos attempted to schedule another closing date for March 2, 2006. However, the records do not reveal any acceptance of the closing date by Michael Daniell.
On the instant motion, plaintiffs Gibaldi and Limperpulos assert their priority on the basis that their contract of sale was signed and recorded prior in time to the mortgage and notice of pendency filed by HSBC. In opposition, HSBC claims that (1) the two certifications attached to the contract of sale are improper; (2) said defect renders the recording of the contract void; and (3) even if the contract was properly recorded, the protection afforded by this recording terminated thirty days after the scheduled closing date pursuant to Real Property § 294.
It is well settled that New York is a "race-notice" jurisdiction, wherein the mortgage recorded first without notice of any other mortgage will obtain priority (Real Property Law § 291; see Alliance Funding Co v. Taboada, 39 AD3d 784 [2nd Dept 2007]). However, § 291 of the Real Property Law requires that before any deed, mortgage or contract for the sale of real property can be recorded, it must contain a proper acknowledgment or duly certified proof of the conveyance ( see Matisoff v. Dobi, 90 NY2d 127, 132). In this regard, Real Property Law § 292 provides that an acknowledgment can only be made by the person who executed the conveyance, while certified proof of the conveyance can only be made by a third person who witnessed the execution, and at the same time subscribed his or her name thereon as a witness.
An acknowledgment encompasses two critical elements, namely, the oral declaration of the signer of the document, and a written certificate of acknowledgment by any one of a number of authorized public officers attesting to the oral declaration ( see Matter of Henken, 150 AD2d 447 [2nd Dept 1989]). Lacking this, proof of a valid execution may take the form of the aforementioned written certificate memorializing the declaration of a third person who witnessed the execution and signed the conveyance as such ( id.).
Here, Gibaldi's signature on the contract of sale was the subject of two separate certifications: one of which purports to prove his identity and the other of which provides that he witnessed its execution and subscribed his name thereto as a witness. There is no public acknowledgment of the signatures of Janet Limperpulos or Michael Daniel.
However, it is uncontroverted that the papers before this Court include two copies of the contract of sale, one obtained from the Office of the County Clerk, and the other a copy of an exhibit submitted by Gibaldi on a prior motion. Notably, these documents are not the same, as the last page of the filed copy includes the following phrase handwritten directly below Gibaldi's signature: "individually, and as a subscribing witness", while the other does not. Neither Gibaldi nor Limperpulos has disputed this obvious alteration of the filed copy, or attempted to tender an explanation.
On these facts, it is the conclusion of this Court that Gibaldi did not subscribe his name to the conveyance as a witness at the time of its execution. Accordingly, since it was not acknowledged in the manner required by law (Real Property Law § 294; see Drago v Flewellin, 33 AD2d 570 [2nd Dept 1969]), the contract of sale was not entitled to be recorded (Real Property Law § 292; see Matter of Henken, 150 AD2d at 447-448). Concordantly, the mortgage held by HSBC takes priority as a matter of law over the contract of sale asserted by Gibaldi and Limperpulos (Real Property Law § 291; see Greenpoint Bank v. Parissi, 256 AD2d 548 [2nd Dept 1998]).
Somewhat similarly, Real Property law § 243 provides that an unacknowledged grant is ineffective as against a subsequent purchaser ( see Matisoff v. Dobi, 90 NY2d at 135).
Finally, HSBC correctly maintains that even if the contract of sale was properly acknowledged and recorded, the protective effect of such recording terminated thirty (30) days from the closing date pursuant to Real Property Law § 294(5), which provides that the recording of the contract shall be effective up to and including the thirtieth day after the day fixed by the contract for the conveyance of title. Here, the contract provided for a closing date of February 1, 2006. It was more than thirty (30) days later, i.e., on March 31, 2006, that Michael Daniell recorded the deed conveying the subject property to himself and his wife, and HSBC's predecessor in interest recorded its mortgage. Therefore, the protection provided by recording act had already expired by the time the mortgage was recorded ( cf. Polish Natl. Alliance of Brooklyn v. White Eagle Hall Co., 98 AD2d 400 [2nd Dept 1983]). Accordingly, it is
ORDERED that the motion to fix priorities by plaintiffs in Action No. 1 as between their Contract of Sale recorded on January 26, 2006 and the mortgage sought to be foreclosed in Action No. 2, which was recorded on March 31, 2006 is granted as follows:
ORDERED that said mortgage is entitled to priority over plaintiffs' Contract of Sale; and it is further
ORDERED that the motion is otherwise denied; and it is further
ORDERED that the Clerk mark his records accordingly.