Opinion
71360/19
02-20-2020
956 ROGERS AVE NDB LLC, Petitioner, v. "John" BLAIR, "John Doe," "Jane Doe," Respondents.
Petitioner's attorney: Lawrence Stern, New York, Esq., Stern & Stern Esqs. Respondent's attorney: Kathleen Brennan, Buffalo, Esq., New York Legal Assistance Group
Petitioner's attorney: Lawrence Stern, New York, Esq., Stern & Stern Esqs.
Respondent's attorney: Kathleen Brennan, Buffalo, Esq., New York Legal Assistance Group
Cheryl J. Gonzales, J. Petitioner commenced this holdover proceeding on July 1, 2019 after serving respondents with a ten day notice to quit after foreclosure pursuant to RPAPL sec 713(5). Attached to the ten day notice is a referee's deed dated May 2, 2019 which transferred title to the property to Labob Krunfol and Daniel Badalov who transferred title to petitioner on the same day. Respondent, Karen Blair, appeared pro se and interposed an answer asserting, inter alia, that she was not properly served after the foreclosure, and no one by the name of John Blair resides in the apartment.
Respondent, Candice McClean, also appeared by counsel, and subsequently moved for an order granting leave to intervene, be named as a respondent and to file a late answer. The resolution court denied Ms. McClean's motion, deemed her answer a general denial and transferred the case to the trial part.
After a conference in the trial part, the parties agreed to submit memoranda on the issue of whether petitioner was required to serve respondent, Candice McClean, who was not in occupancy at the time the foreclosure action was commenced, with a 90 day notice pursuant to RPAPL sec 1305.
Petitioner avers that the subject property was sold at a foreclosure auction pursuant to a judgment of foreclosure and sale in the matter of Nationstar Mortgage LLC v. Karen Blair , Index No. 22150/09. After petitioner took possession of the property, petitioner entered into an agreement with Karen Blair, the former owner, who gave possession of the third floor apartment to petitioner, and informed petitioner that she occupied the first and second floors, but allowed her son to occupy one of the floors. Petitioner then commenced the instant proceeding seeking possession of the first floor of the subject building, and a holdover proceeding seeking possession of the second floor. Petitioner entered into a stipulation of settlement with Karen Blair in the holdover proceeding for possession of the second floor. Petitioner states that Karen Blair also signed an affidavit stating that the occupant of the first floor was not a tenant and did not exclusively occupy that unit. Petitioner contends that after learning of Ms. Blair's affidavit, respondent, Candice McClean, withdrew her motion to dismiss the proceeding based on petitioner's failure to serve her with a 90 day notice. However, upon learning that Ms. Blair was challenging her own affidavit, respondent McClean reasserted her claim.
Petitioner argues that under RPAPL sec 1305(2), after foreclosure, only a tenant of a unit not subject to rent regulation, is entitled to a 90 day notice, and RPAPL sec 1305(1) defines a tenant as someone who appears as a lessee on a lease, and who would have been entitled to a notice pursuant to RPAPL sec 1303 (4). Under RPAPL sec 1303 (4), a foreclosing party is required to serve a notice to tenants within ten days of service of the summons and complaint in the foreclosure action. Petitioner contends that respondent, Candice McClean, who was not in possession in 2009 when the foreclosure action was commenced, is therefore not entitled to a 90 day notice pursuant to RPAPL sec 1305.
Respondent asserts that "The Protecting Tenants at Foreclosure Act" (PTFA) sec 702 requires that petitioner serve a 90 day notice to vacate, and as part of the "Dodd-Frank Wall Street Reform and Consumer Protection Act", Congress amended the PTFA and clarified that the date of the notice of foreclosure is the date on which title is transferred to a successor entity. The referee transferred title to the subject property on May 2, 2019, and respondent contends that Ms. McClean, who was in possession on that date, should have been served with a 90 day notice.
Further, respondent argues that notwithstanding RPAPL sec 1305, which requires service of a 90 day notice on tenants who were in possession at the time the foreclosure action was commenced, the PTFA applies unless as outlined in Howlett v. Rose , 496 U.S. 356, 110 S.Ct. 2430, 110 L.Ed.2d 332 [1990], petitioner proffers a valid excuse that would deny respondent her right under federal law. Litigants may invoke the protections of PTFA by showing a federal nexus between the loan and the property that is the subject of the foreclosure action. Respondent states that the former owner's mortgagor was MERS, and on August 18, 2009, MERS assigned the loan to Fannie Mae which held the mortgage until August 30, 2011. The RJI in the foreclosure action was filed on July 28, 2010. Therefore, respondent argues that Fannie Mae held the mortgage when the foreclosure action was commenced, and under 12 U.S.C. 2602(1), the former owner's mortgage qualifies as a federally related mortgage loan.
Petitioner correctly interprets RPAPL sec 1305 as requiring a 90 day notice only for tenants in occupancy at the time the foreclosure action was commenced. It is undisputed that respondent McClean was not in possession at the commencement of the foreclosure action, and pursuant to RPAPL sec 713(5), petitioner served respondent with a ten day notice to vacate. However, the ten day notice provision under RPAPL sec 713 conflicts with the notice requirements for tenants under the PTFA which affords tenants in possession at the time of transfer of title the right to receive a 90 day notice to vacate (see In Re Valle Bankr., S.D. Cal. , 2011 WL 722388 ).
Therefore, under these circumstances, the PTFA, which protects tenants in foreclosed properties against abrupt evictions ( Bank of America, NA v. Owens , 28 Misc. 3d 328, 903 N.Y.S.2d 667 [2010] ), provides greater protections for tenants than the protection available under RPAPL sec 1305. The PTFA sec 702(2) (B) does not preempt state law that provides greater protections for tenants. However, "it does preempt state law that is less protective of tenants" Mik v. Federal Home Loan Mortgage Corp., 743 F.3d 149 (6th Cir. 2014), GMAC Mortgage, LLC v. Taylor , 27 Misc. 3d 550, 899 N.Y.S.2d 802 [2010]. Therefore, a tenant in possession at the time of transfer of title would be entitled to a 90 day notice to vacate under the PTFA.
The PTFA may be invoked as a defense in a proceeding seeking possession, Mik v. Federal Home Loan Mortgage Corp., 743 F.3d 149 (6th Cir. 2014). Under the PTFA sec 702, the successor in interest who assumes title pursuant to a foreclosure on a federally related mortgage loan assumes such interest subject to rights of a bona fide tenant to receive a 90 day notice to vacate or the right to occupy the premises until the remaining term of the lease. In addition, if the tenant has a lease and the successor in interest will occupy the property as a primary residence, the tenant must be given a 90 day notice to vacate.
Respondent McClean seeks dismissal of this proceeding based on petitioner's failure to serve a 90 day notice to vacate. The PTFA requirements of a bona fide tenancy and a federally related mortgage must be met for respondent to invoke the protection afforded under the PTFA. Accordingly, this matter is set down for a hearing on April 6, 2020 at 9:30am to determine if respondent is entitled to a 90 day notice under the PTFA.