As the COVID-19 pandemic fades, many legal cases that were temporarily postponed by the Courts, such as foreclosures, are resuming and going forward in litigation. This results in more properties owned by borrowers failing to pay their mortgages being foreclosed. Due to the increased number of cases going to a final judgment of foreclosure and sale, and then being sold to the highest bidder, there is an increased amount of rental tenants in foreclosed properties. This post will discuss the legal status of these tenants and what their legal options will be during and after the foreclosure process.
Many rental tenants become aware, during their tenancy, that the owner of the property is being foreclosed, due to their failure to pay the mortgage. As occupants of the premises, the tenants may be served with a foreclosure Summons and Complaint, addressed to “John Doe” and/or “Jane Doe” as occupants, due to the foreclosing lender being unaware of the names of the rental tenants.
In such a case, the rental tenants should engage experienced counsel familiar with the legal aspects of the situation. The rental tenants have several options. Until the foreclosure is completed by an auction sale and legal transfer of the property to either the lender or the successful bidder at the foreclosure sale, a legal tenant is generally not subject to eviction. If the tenant has a current lease of at least fair market value, his is permitted to stay until his lease term expires. Even after their lease expires, in general, tenants will not be subject to eviction proceedings until after the property is transferred from its current owner through the foreclosure process. The new owner may then commence eviction proceedings in the local landlord-tenant Court after it obtains title to the foreclosure property.
A recent article in the New York Post discusses a proposed bill relating to evictions which is being considered by the New York State legislature. The “Good Cause” eviction bill would limit evictions in New York to only the narrowest of circumstances.
Since the expiration of the COVID-19 eviction moratorium in January, evictions have generally resumed in New York. Under the moratorium, landlords were prevented from evicting tenants, unless they were an actual danger to people and property. As COVID-19 waned, the Governor allowed the moratorium to expire. As a result, landlord-tenant Courts have generally resumed normal operations, and tenants have been subject to evictions after proper Court proceedings have been held.
However, as a result of the temporary eviction moratorium, there have been some advocates who are attempting to further limit evictions, even though COVID-19 has waned and available vaccines have greatly reduced the risk factors for most individuals. Under the proposed “Good Cause” eviction bill, landlords would not be allowed to evict tenants, except for non-payment of rent and lease violations.
Our firm handles many partition actions. A partition action is brought when two or more people jointly own real property (or shares in a cooperative), and one or more of the owners no longer wishes to co-own the property. In New York State, there is generally an absolute right to a partition in such situations. This means that when a case is brought, the Court will, assuming the basic legal requirements are met, order that the property be sold and the proceeds equitably divided between the co-owners.
However, as is often the case in the law, there are always exceptions to the general rule. This post will discuss some of the exceptions, and how they may affect a partition action. The most common exception is when there is a prior written agreement between the co-owners regarding the ownership of the property. Under New York law, the agreement must be in writing, and cannot be an oral agreement.
What type of agreement is contemplated by this exception? The first type of agreement would be a contract between the parties to sell their interest to a third party, or for one co-owner to sell his interest to the other. If such a contract exists, and is still legally valid, it would prevent the Court from allowing the property to be sold through the Court-ordered partition process, as the terms of the contract would control the disposition of the property.