1426 46 St. v. Klein
Opinion of the Court
Ordered that the order is modified, on the law, by deleting the provision thereof granting the plaintiffs motion for summary judgment on the complaint, and substituting therefor a provision denying the motion; as so modified, the order is affirmed, without costs or disbursements.
The defendant Agnes Klein and her husband, the defendant Erno Klein, have resided at 1426 46th Street in Brooklyn for more than 36 years. Mrs. Klein allegedly owned the premises in the 1980s, but sold it to Barry Low in 1990 because she was experiencing financial difficulties. Mrs. Klein claims that in exchange for selling the premises to Low at a price significantly below market value, he gave her a 99-year lease to occupy the second floor apartment. Under the terms of the lease, which was dated August 27, 1990, Mrs. Klein was required to pay annual rent consisting of one half of the carrying costs of the premises, and one half of the payments due on a mortgage held by Citibank. However, the 99-year lease was not recorded until October 14, 1997, more than seven years after it was executed.
Soon after purchasing the premises, Low defaulted on his payment obligations under the Citibank mortgage, and in 1991 the bank commenced a foreclosure action against him. It is undisputed that Mrs. Klein was not named as a defendant in the 1991 foreclosure action, and was not served with process. It is also conceded that Mr. Klein was not properly served with process in the foreclosure action. Citibank obtained a judgment of foreclosure and sale in its favor, and on October 14, 1994, the premises were conveyed by referee’s deed to the successful bidder, who was Low’s sister, Ruchie Horowitz.
Ten years later, on October 14, 2004, Horowitz sold the premises to Jacob Daskal and Bella Daskal. On the same day, the Daskals executed a deed conveying the premises to the plaintiff, a limited liability company of which Jacob Daskal is
Contrary to the Supreme Court’s determination, the defendants were necessary parties to the foreclosure action. Pursuant to RPAPL 1311, the plaintiff in a mortgage foreclosure action is required to join, as a party defendant, any person “whose interest is claimed to be subject and subordinate to the plaintiff’s lien,” including “[ejvery person having an estate or interest in possession ... in the property as tenant in fee” (subd [1]). Accordingly, tenants are necessary parties to a foreclosure action (see 6820 Ridge Realty v Goldman, 263 AD2d 22, 25 [1999]; Polish Natl. Alliance of Brooklyn v White Eagle Hall Co., 98 AD2d 400, 404 [1983]). The absence of a necessary party in a foreclosure action leaves that party’s rights unaffected by the judgment and sale, and the foreclosure sale may be considered void as to the omitted party (see 6820 Ridge Realty v Goldman, 263 AD2d at 26; Polish Natl. Alliance of Brooklyn v White Eagle Hall Co., 98 AD2d at 406; see also Glass v Estate of Gold, 48 AD3d 746, 747 [2008]; Board of Mgrs. of Parkchester N. Condominium v Alaska Seaboard Partners Ltd. Partnership, 37 AD3d 332, 333 [2007]). Thus, a lessee who is not joined in a foreclosure action “retains the right to remain in possession of the property for the remainder of the term of his or her tenancy, regardless of whether the lease has been recorded. The failure to join a tenant as a party fails to cut off the tenancy” (2 Mortgages and Mortgage Foreclosure in New York § 32:12). Since the
Furthermore, the court should not have determined, as a matter of law, that the lease was void as against Horowitz, who purchased the premises at the foreclosure sale, because it was unrecorded. Although a lease for a term exceeding three years is a conveyance which may be recorded (see Real Property Law § 290 [2]), an unrecorded conveyance is void only as against a subsequent good faith purchaser for value (see Real Property Law § 291). Moreover, “[ajctual possession of real estate is sufficient notice ... to all the world of the existence of any right which the person in possession is able to establish” (Phelan v Brady, 119 NY 587, 591-592 [1890]; see Ward v Ward, 52 AD3d 919, 921 [2008]; Nethaway v Bosch, 199 AD2d 654 [1993]). Here, in support of its motion for summary judgment, the plaintiff offered no evidentiary proof that its predecessor-in-title, Horowitz, was a good faith purchaser who took title without actual or constructive notice of the defendants’ unrecorded lease interest.
We also reject the plaintiff’s contention that the lease was extinguished by operation of CPLR 6501, which provides that a person whose conveyance is recorded after the filing of a notice of pendency “is bound by all proceedings taken in the action after such filing to the same extent as a party.” In support of its motion for summary judgment, the plaintiff failed to offer sufficient evidence to establish that a notice of pendency was indeed filed in connection with the foreclosure action. Moreover, while “[^Interests acquired prior to the filing of the notice of pendency but not recorded until after the notice was filed” are generally bound by the foreclosure judgment and sale (Polish Natl. Alliance of Brooklyn v White Eagle Hall Co., 98 AD2d at 404), an unrecorded interest in a conveyance is not defeated if the plaintiff in the foreclosure action knew of it prior to the filing of the notice of pendency (see Lamont v Cheshire, 65 NY 30 [1875]; New Falls Corp. v Board of Mgrs. of Parkchester N. Condominium, Inc., 10 AD3d 574 [2004]). Even assuming that Citibank filed a notice of pendency upon the commencement of its foreclosure action, neither the plaintiff nor the defendants have offered sufficient evidence to establish whether Citibank had actual or constructive notice of the unrecorded lease prior to the filing of the notice. Accordingly, it cannot be determined as a matter of law that the lease was extinguished because it was recorded after the alleged filing of a notice of pendency (see New Falls Corp. v Board of Mgrs. of Parkchester N. Condominium, Inc., 10 AD3d 574 [2004]).
Case-law data current through December 31, 2025. Source: CourtListener bulk data.