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Court Hears OSC for Cancellation of Notice of Pendency

Nonparty GA, administrator of the estate of MD, moved by way of order to show cause for an order: 1) cancelling the notice of pendency filed against the subject property on 19 May 2008 by plaintiff CM Inc., successor in interest by merger to AA Mortgage Group, Inc.; and 2) permanently barring as a lien and discharging of record a certain mortgage on the property dated 22 August 2007 given to plaintiff’s predecessor-in-interest by defendant TM, notwithstanding a recorded satisfaction of same dated 4 December 2007.
MD was the owner of the subject property located at 748 Decatur Street in Brooklyn, having taken sole title as tenant by the entirety following the death of her husband, PD.
On 9 February 2006, MD died.
On 10 February 2006, TM executed a deed whereby she purportedly conveyed, as the “executor” of the estate of MD, title to the property to herself as grantee.
On 10 July 2006, TM executed a mortgage on the property in favor of F Investment & Loan to secure a loan in the amount of $250,000.00.
On August 22, 2007, TM executed a mortgage on the property in favor of plaintiff’s predecessor, AA Mortgage Group, Inc. to secure a loan in the amount of $340,000.00. According to the settlement statement of the mortgage, proceeds totaling $251,237.66 were used to pay off the prior F mortgage.
On 6 September 2007, MERS, as nominee for F, issued a satisfaction of the prior $250,000.00 mortgage. On 17 September 2007, the satisfaction of the F mortgage was recorded.
On 4 December 2007, plaintiff issued a satisfaction of its $340,000.00 mortgage, apparently in error. On 11 December 2007, the satisfaction of plaintiff’s mortgage was recorded.
On 19 May 2008, plaintiff filed a notice of pendency on the subject property and commenced the instant action pursuant to Article 15 of the Real Property Actions and Proceedings Law (RPAPL) to vacate the 4 December 2007 satisfaction of mortgage and to restore its mortgage lien to its priority position nunc pro tunc.
On 8 September 2008, GA commenced an action against TM pursuant to RPAPL article 15 to vacate and discharge of record the 10 February 2006 deed purportedly conveying title to TM.
According to GA, she is the sister and next of kin of MD, her interest in the property accrued upon the death of MD and that no will of MD has been probated in Kings County or elsewhere; TM had no power to convey the property as “executor” of MD’s estate and the 10 February 2006 deed should therefore be nullified and discharged of record.
Despite the fact that a notice of pendency against the property was previously filed, plaintiff was not named as a defendant in GA’s action.
On 14 November 2008, TM filed an answer to GA’s complaint which contained general denials and no affirmative defenses.
On 7 April 2009, GA was granted summary judgment on her complaint, the 10 February 2006 deed to TM was adjudged to be null and void, and the City Register was directed, upon presentation of a certified copy of the judgment, to cancel and discharge of record the 10 February 2006 deed.
That part of GA’s motion for cancellation of the notice of pendency filed by plaintiff in this action is denied.
As provided for under CPLR 6501, a notice of pendency may be filed where “the judgment demanded would affect the title to, or the possession, use or enjoyment of, real property, except in a summary proceeding brought to recover the possession of real property.” “When the court entertains a motion to cancel a notice of pendency in its inherent power to analyze whether the pleading complies with CPLR 6501, it neither assesses the likelihood of success on the merits nor considers material beyond the pleading itself; the court’s analysis is to be limited to the pleading’s face.'” As a rule, a lien affecting real estate, satisfied through mistake, may be restored to its original status and priority as a lien, provided that no one innocently relied upon the discharge and either purchased the property or made a loan thereon in reliance upon the validity of that satisfaction.
Here, the ultimate relief demanded by plaintiff, to wit, the cancellation of the satisfaction and the resuscitation of its mortgage lien as of record, clearly would affect the title to the subject property. Truly, absent the filing of a notice of pendency, plaintiff would run the risk of losing its potential mortgage lien to a bona fide purchaser. Thus, it was proper for plaintiff to file the notice of pendency.
CPLR 6514 provides that a motion by a defendant to cancel a properly filed notice of pendency may be granted under the following circumstances: (a) mandatory cancellation – the court, upon motion of any person aggrieved and upon such notice as it may require, shall direct any county clerk to cancel a notice of pendency, if service of a summons has not been completed within the time limited by section 6512; or if the action has been settled, discontinued or abated; or if the time to appeal from a final judgment against the plaintiff has expired; or if enforcement of a final judgment against the plaintiff has not been stayed pursuant to section 5519; (b) discretionary cancellation – the court, upon motion of any person aggrieved and upon such notice as it may require, may direct any county clerk to cancel a notice of pendency, if the plaintiff has not commenced or prosecuted the action in good faith.
GA did not demonstrate that any of the above grounds are applicable.
According to GA, plaintiff must be barred from asserting any mortgage lien against the property based on the 7 April 2009 judgment nullifying the deed to TM; and since TM was adjudged thereby to have never had a valid interest in the property, she had no power to execute the mortgage in favor of plaintiff’s predecessor.
It must be noted that GA commenced her action subsequent to plaintiff’s filing of the notice of pendency in this action, but still failed to join plaintiff as a party defendant. In light of this fact, it is important to note “considerations of due process prohibit personally binding a party by the results of an action in which that party has never been afforded an opportunity to be heard.” Since plaintiff was not named as a party in GA’s action, plaintiff is not, as a matter of due process, affected by the judgment rendered therein, and any mortgage it may have acquired cannot be voided as a lien against the property solely by reason of the judgment against TM.
Several issues which, if presented in the GA litigation, could have led to a finding that the mortgage signed by TM on 22 August 2007 constitutes a valid lien on the subject property. A putative mortgagor must have a mortgageable interest in the property sought to be charged as security. Thus, any mortgage based on a deed which is forged or made under false pretenses is void ab initio as the purported grantee under the void deed was never vested with a mortgagable interest in the property.
In GA’s complain, the gravamen is that TM had no authority as an “executor” to issue the 10 February 2006 deed to herself nor did TM have any other interest in the subject property as a relative or heir of MD. Nonetheless, it must be noted that, under the law, title to real property devised under the will of a decedent vests in the beneficiary at the moment of the testator’s death and not at the time of probate.
In opposition to GA’s motion, plaintiff submitted a copy of a purported last will and testament of MD, dated 16 February 2004, which provided, in part, as follows:
“THIRD: I direct my Executor to pay out of my estate as an expense of administration, without apportionment, all estate, death, transfer, succession, inheritance, legacy and similar taxes by whatever name called, including interest and penalties thereon, which may be assessed or imposed under the laws of any jurisdiction by reason of my death, upon or with respect to any property passing under this my LAST WILL AND TESTAMENT.

FOURTH: All the rest, residue and remainder of my property and estate, real, personal or mixed of whatever kind and nature, wherever the samemay be situated or located, of which I may die seized or possessed or to which I may in any way be entitled at the time of my death, I give, devise and bequeath to my granddaughter TM, residing at 748 Decatur Street, Brooklyn, New York…”
Obviously, there is a possible issue as to whether TM, despite any impropriety in her issuing an executor’s deed to herself, nonetheless acquired a mortgageable interest in the property as the testamentary beneficiary following the death of MD.
Furthermore, there is no dispute that the funds secured by plaintiff’s mortgage were used to satisfy the prior F mortgage in full. Based upon the records of the City Register, the subject property was encumbered by a $40,000.00 mortgage in favor of EBR at the time of MD’s death. This mortgage was satisfied as evidenced by the satisfaction of mortgage dated 15 July 2006 and recorded on 12 September 2006. According to the settlement statement generated for the F mortgage transaction, the sum of $112,597.00 from the F loan was disbursed to BSR. The satisfaction of mortgage dated 15 July 2006 was issued by MLR and BSR as “the sole heirs at law” of EBR. So, an additional question exists as to whether, notwithstanding any infirmities in the title of TM, plaintiff’s lien may be equitably subrogated to the lien of EBR to the extent of the amount of funds from the F loan which were used to satisfy and discharge her mortgage.
Accordingly, the court denies that branch of GA’s motion for an order discharging, cancelling or barring the assertion of any mortgage lien in favor of plaintiff.Stephen Bilkis & Associates are experts in proceedings discussed in the case above. If you have questions, please feel free to call our toll free number or visit our place of business. We are here to serve.

Stephen Bilkis & Associates are experts in proceedings discussed in the case above. If you have questions, please feel free to call our toll free number or visit our place of business. We are here to serve.

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