Real Property Actions & Proceedings

ARTICLE 13

ACTION TO FORECLOSE A MORTGAGE
Section 1301. Separate action for mortgage debt.
1302. Foreclosure of high-cost home loans.
1311. Necessary defendants.
1312. Representative defendants.
1313. Permissible defendants.
1315. Action by owner of junior participating interest.
1321. Default or admission.
1325. Receiver.
1331. Notice of pendency.
1341. Payment into court of amount due.
1351. Judgment of sale.
1352. Judgment foreclosing right of redemption.
1353. Conveyance.
1354. Distribution of proceeds of sale.
1355. Report of sale; confirmation.
1361. Application for surplus; reference.
1362. Payment of surplus out of court.
1371. Deficiency judgment.
1391. Proceeding for share of unknown heirs.

S 1301. Separate action for mortgage debt. 1. Where final judgment
for the plaintiff has been rendered in an action to recover any part of
the mortgage debt, an action shall not be commenced or maintained to
foreclose the mortgage, unless an execution against the property of the
defendant has been issued upon the judgment to the sheriff of the county
where he resides, if he resides within the state, or if he resides
without the state, to the sheriff of the county where the judgment-roll
is filed; and has been returned wholly or partly unsatisfied.
2. The complaint shall state whether any other action has been brought
to recover any part of the mortgage debt, and, if so, whether any part
has been collected.
3. While the action is pending or after final judgment for the
plaintiff therein, no other action shall be commenced or maintained to
recover any part of the mortgage debt, without leave of the court in
which the former action was brought.

S 1302. Foreclosure of high-cost home loans. 1. Any complaint served
in a proceeding initiated pursuant to this article relating to a
high-cost home loan, as defined in section six-l of the banking law,
must contain an affirmative allegation, which allegation must be proven
to the satisfaction of the court before entry of judgment by default or
otherwise, that the plaintiff mortgage banker or exempt organization has
complied with all of the provisions of section five hundred
ninety-five-a and section six-l of the banking law.
2. It shall be a defense to an action to foreclose a mortgage that the
home loan violates any provision of section six-l of the banking law.

S 1311. Necessary defendants. Each of the following persons, whose
interest is claimed to be subject and subordinate to the plaintiff`s
lien, shall be made a party defendant to the action:
1. Every person having an estate or interest in possession, or
otherwise, in the property as tenant in fee, for life, by the curtesy,
or for years, and every person entitled to the reversion, remainder, or
inheritance of the real property, or of any interest therein or
undivided share thereof, after the determination of a particular estate
therein.
2. Every person having a right of dower or an inchoate right of dower
in the real property or any part or share thereof.
3. Every person having any lien or incumbrance upon the real property
which is claimed to be subject and subordinate to the lien of the
plaintiff.
4. Where the mortgage is upon any of the public utilities regulated by
the public service law, the public service commission.

S 1312. Representative defendants. 1. Where a trust has been created
by will or by deed or by declaration of trust, the trustees of such
trust who shall have duly qualified shall be made parties defendant and
shall represent all persons who are or may become entitled to a
beneficial interest in the property or an undivided share thereof or in
the proceeds of sale thereof under and by virtue of said trust and all
remaindermen who are or may become entitled to the reversion, remainder
or inheritance of the property or the proceeds of sale thereof either
before or after the termination of said trust, without naming such
beneficiaries or remaindermen as parties defendant. Service of the
summons and complaint upon any one of such duly qualified trustees shall
be sufficient service upon the trust estate and upon all persons who are
or may become entitled to a beneficial interest in the property or an
undivided share thereof or in the proceeds of sale thereof and all
remaindermen who are or may become entitled to the reversion, remainder
or inheritance of the property or the proceeds of sale thereof either
before or after the termination of said trust.
2. Whenever the duly qualified executors under a will are made parties
defendant they shall represent all of the legatees named in the will and
the successors and assigns of such legatees, irrespective of whether or
not such legacies are a charge upon the real property, and such
legatees, their successors and assigns need not be named as parties
defendant. Service of the summons and complaint upon any one of such
duly qualified executors shall be sufficient service upon the executors
under said will and upon all legatees named in said will, their
successors and assigns, irrespective of whether or not such legacies are
a charge upon the real property.

S 1313. Permissible defendants. Any person who is liable to the
plaintiff for payment of the debt secured by the mortgage may be made a
defendant in the action. The state may be made a party defendant to an
action for the foreclosure of a mortgage on real property, where it has
an interest in or a lien on the property subsequent to the lien of the
mortgage sought to be foreclosed in said action, in the same manner as a
private person.

S 1315. Action by owner of junior participating interest. An action
may be maintained by the owner of a junior participating share or
interest in a bond or note secured by a mortgage on real, or on real and
personal property, for the payment of principal and interest and for
foreclosure of such bond or note and mortgage in its entirety, or in the
alternative, subject to the interest of the owner of the senior share,
notwithstanding that the entire mortgage debt may be due and payable
according to its terms, in the event that the owner of the senior share,
to whom is given the right in the participating agreement to enforce
such bond or note and mortgage shall fail or refuse to commence an
action for the enforcement of such bond or note and mortgage in any
manner permitted thereby, after ten days` written notice and demand to
commence any such action, following default in the performance of any of
the terms and covenants of such bond or note and mortgage. Upon such
failure or refusal, such junior participant may exercise any and all
options and remedies provided in such bond or note and mortgage or
otherwise available to any holder thereof.

S 1321. Default or admission. 1. If the defendant fails to answer
within the time allowed or the right of the plaintiff is admitted by the
answer, upon motion of the plaintiff, the court shall ascertain and
determine the amount due, or direct a referee to compute the amount due
to the plaintiff and to such of the defendants as are prior
incumbrancers of the mortgaged premises, and to examine and report
whether the mortgaged premises can be sold in parcels and, if the whole
amount secured by the mortgage has not become due, to report the amount
thereafter to become due. Where the defendant is an infant, and has put
in a general answer by his guardian, or if any of the defendants be
absentees, the order of reference also shall direct the referee to take
proof of the facts and circumstances stated in the complaint and to
examine the plaintiff or his agent, on oath, as to any payments which
have been made.
2. When he moves for judgment, the plaintiff shall show whether any of
the defendants who have not appeared are absentees.

S 1325. Receiver. 1. Where the action is for the foreclosure of a
mortgage providing that a receiver may be appointed without notice,
notice of a motion for such appointment shall not be required.
2. Where a receiver has been appointed, upon the application of the
plaintiff or of any holder of a certificate evidencing an undivided
interest in the mortgage or mortgage debt and upon proof that no answer
has been interposed affecting the validity of the mortgage or the amount
due thereon, or asserting any prior lien, or asserting a plea of tender
of payment of the amount due, or which if sustained would affect in any
way the right of the plaintiff to a judgment in foreclosure and to the
payment of the amount claimed by the plaintiff in his complaint to be
due, the court may direct that the receiver of the rents appointed in
such action apply, during the pendency of the action, the rents received
by him towards the payment of accrued interest on the mortgage, provided
due provision shall have been made for the payment of taxes,
administration expenses, fees and charges and such reserve as the court
may direct. Any monies so paid over by the receiver shall be deducted
from the amount of the judgment in said action.
2-a. Where a receiver has been appointed, the order of appointment
shall direct the owner or lessee of the mortgaged premises to turn over
to the receiver all security deposits received by such owner or lessee
and shall further direct the receiver to hold the security subject to
such disposition thereof as shall be provided in a further order of the
court to be made and entered in the foreclosure action, in accordance
with the provisions of section 7-105 of the general obligations law.
3. In a city with a population of one million or more persons an order
appointing a receiver to receive the rents and profits of a multiple
dwelling shall provide that the receiver:
(a) register with any municipal department as provided by applicable
law; and
(b) expend rents and income and profits as described in subdivision
two of this section, except that a priority shall be given to the
correction of immediately hazardous and hazardous violations of housing
maintenance laws within the time set by orders of any municipal
department, or, if not practicable, seek a postponement of the time for
compliance.

S 1331. Notice of pendency. The plaintiff, at least twenty days
before a final judgment directing a sale is rendered, shall file in the
clerk`s office of each county where the mortgaged property is situated a
notice of the pendency of the action, which shall specify, in addition
to other particulars required by law, the date of the mortgage, the
parties thereto and the time and place of recording.

S 1341. Payment into court of amount due. Where an action is brought
to foreclose a mortgage upon real property upon which any part of the
principal or interest is due, and another portion of either is to become
due, and the defendant pays into court the amount due for principal and
interest and the costs of the action, together with the expenses of the
proceedings to sell, if any, the court shall:
1. Dismiss the complaint without costs against plaintiff, if the
payment is made before judgment directing sale; or
2. Stay all proceedings upon judgment, if the payment is made after
judgment directing sale and before sale; but, upon a subsequent default
in the payment of principal or interest, the court may make an order
directing the enforcement of the judgment for the purpose of collecting
the sum then due.

S 1351. Judgment of sale. 1. The judgment shall direct that the
mortgaged premises, or so much thereof as may be sufficient to discharge
the mortgage debt, the expenses of the sale and the costs of the action,
and which may be sold separately without material injury to the parties
interested, be sold by or under the direction of the sheriff of the
county, or a referee.
2. Where the mortgage debt is not all due, and the mortgaged property
is so circumstanced that it can be sold in parcels without injury to the
interests of the parties, the final judgment shall direct that no more
of the property be sold in the first place than is sufficient to satisfy
the sum then due, with the costs of the action and expenses of the sale.
Upon a subsequent default in the payment of principal or interest the
plaintiff may apply for an order directing the sale of the residue, or
of so much thereof as is necessary to satisfy the amount then due, with
the costs of the application and the expenses of the sale. The
plaintiff may apply for and obtain such an order as often as a default
happens. If it appears that the mortgaged property is so circumstanced
that a sale of the whole will be most beneficial to the parties, the
final judgment may direct that the whole property be sold discharged
from the entire mortgage debt and that the proceeds of the sale, after
deducting the costs of the action and the expenses of the sale, be
either applied to the satisfaction of the whole sum secured by the
mortgage, with such a rebate of interest as justice requires; or be
first applied to the payment of the sum due, and the balance, or so much
thereof as is necessary, be invested at interest for the benefit of the
plaintiff, to be paid to him from time to time as any part of the
principal or interest becomes due, or may, at the option of the
mortgagee, direct that the whole property be sold to satisfy the debt
then due with the costs of the action and expenses of the sale, subject
to the continuing lien of the mortgage for the amount of the debt not
then due and unpaid according to its terms. The provisions of this
section shall not limit or affect the plaintiff`s right to judgment and
sale in an action specified in section 1315.
3. If it appears to the satisfaction of the court that there exists no
more than one other mortgage on the premisis which is then due and which
is subordinate only to the plaintiff`s mortgage but is entitled to
priority over all other liens and encumbrances except those described in
subdivision 2 of section 1354, upon motion of the holder of such
mortgage made without valid objection of any other party, the final
judgement may direct payment of the subordinate mortgage debt from the
proceeds in accordance with subdivision 3 of section 1354.

S 1352. Judgment foreclosing right of redemption. Where real property
has been sold pursuant to a judgment in an action to foreclose a
mortgage, and an action is thereafter brought to foreclose or extinguish
a right of redemption in such real property, the judgment, instead of
directing a sale of the property, shall fix the right of any person
having a right of redemption therein or the right to foreclose a
subordinate mortgage or other lien and shall provide that a failure to
redeem or commence an action for the foreclosure of such mortgage or
other lien within such time shall preclude such person having a right of
redemption or the holder of such mortgage or other lien from redeeming
such property or foreclosing such mortgage or other lien, and thereafter
such person having a right of redemption or the holder of such mortgage
or other lien shall be excluded from claiming any title or interest in
such property and all title or interests of such person having a right
of redemption in, or the right to foreclose a subordinate mortgage or
other lien against such property shall thereby be extinguished and
terminated.

S 1353. Conveyance. 1. After the property has been sold, the officer
conducting the sale shall execute a deed to the purchaser. The
plaintiff, or any other party, may become a purchaser.
2. Before a deed is executed to the purchaser, the plaintiff shall
file the mortgage and any assignment not shown to have been lost or
destroyed in the office of the clerk, unless it is in a form which can
be recorded; in which case it shall be recorded in the counties where
the lands are situated; the expense of filing or recording and entry
shall be allowed in the taxation of costs; and, if filed with the clerk,
he shall enter in the minutes the time of filing.
3. The conveyance vests in the purchaser the same estate only that
would have vested in the mortgagee if the equity of redemption had been
foreclosed. Such a conveyance is as valid as if it were executed by the
mortgagor and mortgagee, and, except as provided in section 1315 and
subdivision 2 of section 1341, is an entire bar against each of them and
against each party to the action who was duly summoned and every person
claiming from, through or under a party by title accruing after the
filing of the notice of the pendency of the action.

S 1354. Distribution of proceeds of sale. 1. The officer conducting
the sale shall pay, out of the proceeds, unless otherwise directed, the
expenses of the sale, and pay to the plaintiff, or his attorney, the
amount of the debt, interest and costs, or so much as the proceeds will
pay and take the receipt of the plaintiff, or his attorney, for the
amount so paid, and file the same with his report of sale.
2. The officer conducting the sale shall pay out of the proceeds all
taxes, assessments, and water rates which are liens upon the property
sold, and redeem the property sold from any sales for unpaid taxes,
assessments or water rates which have not apparently become absolute. In
any city having a population of three hundred thousand or more or any
city having a population between one hundred twenty-five thousand and
one hundred seventy-five thousand, such officer shall pay out of the
proceeds any liens or incumbrances placed by a city agency upon the real
property which have priority over the foreclosed mortgage. The sums
necessary to make those payments and redemptions are deemed expenses of
the sale. The provisions of this subdivision shall not apply to any
judgment in an action wherein any municipal corporation of this state is
the plaintiff and the purchaser at the foreclosure sale thereunder.
3. The officer conducting the sale after fully complying with the
provisions of subdivisions one and two of this section and if the
judgment of sale has so directed shall pay to the holder of any
subordinate mortgage or his attorney from the then remaining proceeds
the amount then due on such subordinate mortgage, or so much as the then
remaining proceeds will pay and take the receipt of the holder, or his
attorney for the amount so paid, and file the same with his report of
sale.
4. All surplus moneys arising from the sale shall be paid into court
by the officer conducting the sale within five days after the same shall
be received.

S 1355. Report of sale; confirmation. 1. Within thirty days after
completing the sale and executing the proper conveyance to the
purchaser, unless such time be extended by the court within said thirty
days, the officer making the sale shall file with the clerk his report
under oath of the disposition of the proceeds of the sale, accompanied
by the vouchers of the persons to whom payments were made.
2. A motion to confirm such report of sale shall not be made within
three months after the filing of the report and shall in any event be
made not later than four months after the filing of such report, except
that if there be no surplus moneys arising from the sale of the
mortgaged premises under such judgment, an application for confirmation
of the report of sale may be made at any time after the report shall
have been filed eight days. Where the report of sale shows surplus money
the party moving for confirmation of the report of sale shall present
with his motion papers a proper voucher for the surplus moneys showing
that they have been paid into court, a certificate of the clerk
specifying the notices of claim to the surplus moneys, if any, so filed
with him, and an affidavit showing any other unsatisfied lien on the
property.

S 1361. Application for surplus; reference. 1. Any person claiming the
surplus moneys arising upon the sale of mortgaged premises, or any part
thereof, either in his own name, or by his attorney, at any time before
the confirmation of the report of sale, may file with the clerk in whose
office the report of sale is filed, a written notice of such claim,
stating the nature and extent of his claim and the address of himself or
his attorney.
2. On the motion for confirmation, or at any time within three months
thereafter, on notice to all parties who have appeared in the action or
filed claims, on motion of any party to the action, or any person who
has filed a notice of claim on the surplus moneys, the court, by
reference or otherwise, shall ascertain and report the amount due to him
or any other person who has a lien on such surplus moneys, and the
priority of the several liens thereon and order distribution of surplus
moneys.
3. The owner of the equity of redemption, or any party who has
appeared in the action or any person who files a notice of claim or who
has a recorded lien against the property shall be given notice by mail
or in such other manner as the court shall direct, to attend any hearing
on disposition of surplus money.

S 1362. Payment of surplus out of court. 1. Upon confirmation of the
report of sale, or upon such proceedings as are provided in section
1361, the court shall order the payment of the surplus proceeds of sale
out of court to such persons as are entitled thereto.
2. If the property sold has included a right to dower, whether
inchoate or consummate, a tendency by curtesy, or any other estate for
life or years, the owner of such particular estate in the real property
sold is entitled to receive from the surplus, in satisfaction of his
estate or interest, either a sum in gross or the earnings of a sum
invested for his benefit. The determination as to whether a sum in gross
or the earnings of a sum invested shall be awarded to the owner of such
particular estate shall be governed by the provisions of section 968
with respect to the proceeds of a sale in partition.
3. If real property or an interest in real property which is liable to
be disposed of as prescribed in article thirteen of the surrogate`s
court act, be sold to satisfy a mortgage or other lien thereon, which
mortgage or lien accrued during the decedent`s lifetime, the surplus
money shall be paid in to the surrogate`s court having jurisdiction to
issue letters testamentary or of administration upon the estate of the
decedent, in the following cases: (a) If eighteen months have not
elapsed since the date when letters testamentary or of administration
were first issued. (b) If a proceeding for a judicial settlement of the
accounts of such executor or administrator has been commenced within
eighteen months from the date of the issue of such letters and is still
pending. (c) If no such letters have been issued and two years have not
elapsed since the death of the decedent.

S 1371. Deficiency judgment. 1. If a person who is liable to the
plaintiff for the payment of the debt secured by the mortgage is made a
defendant in the action, and has appeared or has been personally served
with the summons, the final judgment may award payment by him of the
whole residue, or so much thereof as the court may determine to be just
and equitable, of the debt remaining unsatisfied, after a sale of the
mortgaged property and the application of the proceeds, pursuant to the
directions contained in such judgment, the amount thereof to be
determined by the court as herein provided.
2. Simultaneously with the making of a motion for an order confirming
the sale, provided such motion is made within ninety days after the date
of the consummation of the sale by the delivery of the proper deed of
conveyance to the purchaser, the party to whom such residue shall be
owing may make a motion in the action for leave to enter a deficiency
judgment upon notice to the party against whom such judgment is sought
or the attorney who shall have appeared for such party in such action.
Such notice shall be served personally or in such other manner as the
court may direct. Upon such motion the court, whether or not the
respondent appears, shall determine, upon affidavit or otherwise as it
shall direct, the fair and reasonable market value of the mortgaged
premises as of the date such premises were bid in at auction or such
nearest earlier date as there shall have been any market value thereof
and shall make an order directing the entry of a deficiency judgment.
Such deficiency judgment shall be for an amount equal to the sum of the
amount owing by the party liable as determined by the judgment with
interest, plus the amount owing on all prior liens and encumbrances with
interest, plus costs and disbursements of the action including the
referee`s fee and disbursements, less the market value as determined by
the court or the sale price of the property whichever shall be the
higher.
3. If no motion for a deficiency judgment shall be made as herein
prescribed the proceeds of the sale regardless of amount shall be deemed
to be in full satisfaction of the mortgage debt and no right to recover
any deficiency in any action or proceeding shall exist.
4. Notwithstanding the foregoing provisions and irrespective of
whether a motion for a deficiency judgment shall have been made or, if
made, shall have been denied, the court shall direct that all moneys
remaining in the hands of a receiver of the rents and profits appointed
in the action, after the payment of the receiver`s fees and the expenses
of the receivership, or any moneys remaining in the hands of a mortgagee
in possession or an assignee of the rents and profits of the premises,
shall be paid to the plaintiff to the extent of the amount, if any, by
which the judgment of foreclosure and sale exceeds the amount paid for
the property upon the sale.

S 1391. Proceeding for share of unknown heirs. Sections 991 and 992
shall apply to an action to foreclose a mortgage on real property.