Property Mortgage Laws in New York

New York mostly functions using the lien theory wherein the property stays as security for the loan in question. The documentation through which the property’s lien is placed is known as a mortgage. A non-judicial foreclosure procedure exists in New York but is hardly ever used by lenders.

A judicial foreclosure procedure has to be followed by lenders in New York where a lender has to go through a court which in turn pronounces the foreclosure’s final verdict. The property then sells at a publicly notified sale. The Supreme Court within the county where the property is situated has jurisdiction over foreclosures within that county. Foreclosure complaints which involve properties within Manhattan have to be filed at the New York Supreme Court, New York County. A complaint in combination with a lis pendens (a document that is recorded to provide a notice to the public about the property in foreclosure) needs to be filed in the Supreme Court.

LEGAL INSTRUMENTS

The legal documents are referred to as a mortgage or note, and in cases of commercial transactions, a security agreement. At times, the security agreement and the document of mortgage are merged. The filing of a mortgage is done to validate the loan in question and its repayment terms, which are included in the note.

TIME PERIOD

It can take around 120 to 180 days for a foreclosure that is not contested to come into effect, with the schedule of the court taken into account. If the action is contested and the hearings are sought to be postponed by the borrower, or if bankruptcy is filed for by the borrower, there can be a delay in the process. A notice of the foreclosure sale has to be advertised a minimum of four weeks prior to the sale, and once the final ruling on the foreclosure is issued; it normally takes four months for the sale to take place.

STATUTORY RIGHT OF REDEMPTION

The state of New York does not have the provision of a statutory right of redemption through which a property can be reclaimed upon payment of the total amount on the unpaid loan and the costs.

DEFICIENCY JUDGMENT

If a property is sold for lesser than the amount which is secured by the mortgage at the public-sale, the lender can obtain a deficiency judgment. This results in the borrower owing to the lender, the difference of the original amount of the loan and the auction’s selling price of the property. To put into effect this right, a motion must be filed by the plaintiff within ninety days of the property’s auction sale.

STATUTES

Foreclosures in New York are governed by laws that are part of the New York State Consolidated Laws, Article 13.