The week's case study looks at preventing a foreclosure auction. Make sure to also read last week's case study, Case Study #1: Eviction After a Fraudulent Sale.
We handled a second case where a homeowner was given notice on a Friday of an upcoming foreclosure sale on Tuesday, and with Monday being a holiday. A predatory bank commenced an action more than six years ago against a husband that was solely on deed and who had borrowed money using a mortgage. As most plaintiff banks fall into, they inadvertently forgot to add the wife as a defendant. Even though she did not sign the mortgage or was on deed, by operation of law by being married, she is a one-half owner of the property. In addition, she is a necessary party because she is entitled to this “dower.”
The law firm realized their mistake, but instead of simply naming the wife and re-serving, they decided to claim that an additional copy was served on the husband under the name “JOHN DOE#1” and that satisfied service for the wife even though she was not named or described in the complaint. One year later, the bank had the court sign an order without notice to the homeowner that included a provision to allow the wife’s name to be substituted for “JOHN DOE#1” But they did not serve it upon the wife.
The homeowner received notice on a Friday night that their property was being auctioned off in a foreclosure sale at 11:30 am the following Tuesday. As Monday was a holiday, we submitted an emergency order to show cause Tuesday morning for an application to stay the foreclosure sale and to dismiss the action because they failed to obtain personal jurisdiction over a necessary party. Our application was granted at 11:25 and we were able to stave off the sale at the last minute.
The court will hold a hearing and will most likely dismiss the foreclosure action. Since the action is more than six years old, we will then commence a second action under RPAPL 1501 to remove the mortgage lien from title so that they can own the property free and clear of a mortgage loan.