| Cashin v Simek |
| 2009 NY Slip Op 01437 [59 AD3d 657] |
| February 24, 2009 |
| Appellate Division, Second Department |
| Joan Cashin, Respondent, v Susan Simek, Defendant.Island Properties & Associates, LLC, Nonparty Appellant. |
—[*1] Rusk, Wadlin, Heppner & Martuscello, LLP, Kingston, N.Y. (Jason J. Kovacs of counsel),for respondent.
In an action to a foreclose mortgage, the nonparty Island Properties & Associates, LLC, assuccessful bidder at the foreclosure sale, appeals, as limited by its brief, from so much of anorder of the Supreme Court, Dutchess County (Brands, J.), dated August 3, 2007, as granted thatbranch of the plaintiff's cross motion which was to compel it to reimburse the referee for realproperty taxes paid by the plaintiff in the sum of $61,524.95.
Ordered that the order is affirmed insofar as appealed from, with costs payable to therespondent.
In this foreclosure action, the judgment of foreclosure and sale, the notice of sale, and theterms of sale each provided that the successful bidder would take the property subject to thepayment by the successful bidder of any unpaid taxes, liens, or encumbrances. Island Properties& Associates, LLC (hereinafter Island Properties), as successful bidder at the foreclosure sale,refused to make those payments. It contends that, pursuant to RPAPL 1354 (2), those paymentsmust be made out of the proceeds of the foreclosure sale.
By Laws of 1997 (ch 232), RPAPL 1354 (2) was amended to require that taxes, assessments,and water rates which are liens on the property be paid out of the proceeds of a mortgageforeclosure [*2]sale. Further, the amendment deleted thelanguage "unless the judgment otherwise directs." The purpose of this amendment was to insurethat municipalities were paid the amounts owed to them (1997 NY Legis Ann, at 144).
Nevertheless, it has repeatedly been held that the terms of the judgment of foreclosure andsale control (see Bank of N.Y. vLove, 3 AD3d 303 [2004]). Where, as here, the record demonstrates that the purchaserhad notice that the property at issue was being sold subject to the payment by the purchaser ofany unpaid taxes, liens, or encumbrances pursuant to the terms of the judgment of foreclosureand sale, the purchaser is bound by those provisions. "Having proceeded with the purchase underthose terms, the [appellant] cannot now claim that the judgment of foreclosure and sale should bemodified to eliminate that obligation" (Merrill Lynch Credit Corp. v Averell, 283 AD2d618 [2001]; see Better Homes Depot v Kraut, 282 AD2d 637 [2001]; Federal Natl.Mtge. Assn. v Nittoli, 250 AD2d 427 [1998]). By complying with the terms of the judgment,the statutory objective of insuring the municipality is paid is satisfied, since the bidder isrequired to pay outstanding taxes at the closing.
In the instant case, since Island Properties refused to close, the plaintiff paid the taxes toavoid forfeiture and the appellant must now make reimbursement. Since the terms of thejudgment of foreclosure were clear, by proceeding with the sale, and not seeking vacatur of thesale, the appellant in effect waived any claim that the judgment should be modified to complywith RPAPL 1354 (2) (see Merrill Lynch Credit Corp. v Averell, 283 AD2d 618 [2001];Better Homes Depot v Kraut, 282 AD2d 637 [2001]; Federal Natl. Mtge. Assn. vNittoli, 250 AD2d 427 [1998]). Fisher, J.P., Balkin and Chambers, JJ., concur.
McCarthy, J. (concurring, with the following memorandum): I write separately to emphasizethat judgments of foreclosure and sale should be drafted in strict accordance with RPAPL 1354(2), which provides, in pertinent part, that "[t]he officer conducting the sale shall pay outof the proceeds all taxes, assessments, and water rates which are liens upon the property sold"(emphasis added). Prior to 1997, RPAPL 1354 (2) provided, in pertinent part, that "the officerconducting the sale shall pay, out of the proceeds, unless the judgment otherwise directs,all taxes, assessments, and water rates which are liens upon the property" (L 1997, ch 232,§ 1 [emphasis added]). In 1997, the statute was amended to remove the language "unlessthe judgment otherwise directs" (id.), thereby eliminating the option that the propertycould be sold subject to "all taxes, assessments, and water rates which are liens upon theproperty." As the judgment of foreclosure and sale at bar, which is dated May 2, 2006, nine yearsafter the 1997 amendment, directed the referee to sell the premises "subject to any realestate taxes, assessments, water charges, and sewer rents which are or may become liens on thepremises with interest and penalties which may have accrued" (emphasis added), it was not inaccordance with RPAPL 1354 (2). However, as constrained by our prior holdings, I agree thatthe order should be affirmed insofar as appealed from (see Merrill Lynch Credit Corp. vAverell, 283 AD2d 618 [2001]; Better Homes Depot v Kraut, 282 AD2d 637 [2001];see also Bank of N.Y. v Love, 3AD3d 303, 305 [2004]; Federal Natl. Mtge. Assn. v Nittoli, 250 AD2d 427 [1998];cf. Fleet Fin. v Gillerson, 277 AD2d 279 [2000]).
In the legislative memorandum in support of the 1997 amendment to RPAPL 1354, thejustification for the amendment was expressed as follows: "Given the current financialdifficulties being experienced by state and local governments, it becomes increasingly necessarythat local governments utilize all available resources in a [*3]more cost effective manner. In doing so, local governments mustalso pursue every available revenue source, especially revenues already owed to themunicipality. This bill assures municipalities of the payment of back taxes, liens, assessmentsand water rates as a condition of any foreclosure sale. For example, in 1990 and 1991, in the Cityof Buffalo there were four major properties struck down to foreclosure and sold at auction whichwould have provided Buffalo with over $3 million rightfully owed the City at the time of thesesales. The judgment in those cases permitted the sales to be made subject to the taxes and, as aconsequence, the taxes were not paid out of the sale proceeds and the City of Buffalo wasrequired to pursue other means to collect the taxes which resulted in additional delay andexpense" (1997 NY Legis Ann, at 144).
The justification for amending the statute in 1997 remains true. Further, as noted previously,the plain language of RPAPL 1354 (2) clearly requires the judgment of foreclosure and sale toprovide that back taxes, assessments, and water rates will be paid out of the sale proceeds. In myview, strict adherence to RPAPL 1354 will best assure that municipalities will obtain therevenues to which they are entitled, without delay and expense.