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New Jersey Assembly and Senate passed A5820/S3866, a bill which will sunset more than 140 of Governor Murphy’s pandemic related executive orders within 30 day.  The Governor signed same on 6/4/2021.   As we previously informed you when the Governor Murphy issued Executive Order 240 extending the State of Emergency in New Jersey through June 14, 2021, Murphy indicated that it would be the last such extension if legislation was passed that would ensure his ability to continue to manage the State’s response to the COVID-19.  This is very clearly the legislature’s response.

While this is a positive sign of progress, unfortunately the bill stopped short of ending all executive orders, leaving 14 such orders active.  Over the fierce objection of many Republican Senators, the bill retains the moratorium on evictions enacted under Executive Order 106, and extends that moratorium until January 1, 2022. 

As we previously advised Executive Order 106 included a provision which would automatically terminate the eviction moratorium 60 days after the state of emergency was concluded, or August 14, 2021.  This new legislation would override that provision, extending the termination of the stay four and half months to January 1, 2022.  Additionally, and perhaps most importantly, Sheriffs in New Jersey continue to interpret Executive Order 106 to bar them from proceeding to sale, and we unfortunately see nothing in the new legislation which will alter that interpretation.  Unless Sheriffs change their interpretation, we very likely will not be able to proceed with setting sale on occupied, residential loans in New Jersey until January 1, 2022.  For more information please contact Deborah Gallo, Esq at dgallo@friedmanvartolo.com. 

The Legislature in New York is clearly frustrated with the recent decision of the Court of Appeals in Freedom Mtge. Corp. v Engel, NY3d, 2021 NY Slip Op 01090 (2021).  The Engel decision resolved a split between the First and Second Departments regarding whether a default letter clearly and unequivocally affirmatively accelerates a mortgage debt and provides much needed clarity on what conduct sufficiently accelerates a mortgage debt and revokes acceleration.    Specifically, the Court found:

1. a default letter stating that the lender “will” accelerate the debt referred to a future event and therefore did not accelerate the debt;
2. the voluntary discontinuance of a foreclosure action (whether by motion or stipulation) within six years of acceleration, alone, revokes acceleration as a matter of law, unless the noteholder expressly states otherwise;
3. the reason for a noteholder’s revocation is irrelevant, thereby expressly rejecting the concept that a noteholder’s revocation of acceleration cannot be “pretextual” to merely avoid the expiration of the statute of limitations; and
4. a verified foreclosure complaint that accelerates the mortgage debt must clearly and accurately refer to the loan documents and debt at issue.

As a result of this decision, the Assembly and Senate of New York have both proposed legislation that would clarify and overturn the Engel decision.  Assembly Bill 7737 is pending before the New York State Assembly. The Bill is the latest in a series of proposed legislation designed to limit a mortgagee plaintiff’s ability to foreclose on debt which might otherwise be time barred. 

Assembly Bill 7737 amends RPAPL 1301 to now state “If an action to collect any part of the mortgage  debt  is  adjudicated  to  be barred by the applicable statute of limitations, any other action seeking to recover any part of the same mortgage debt shall  also be barred by the statute of limitations.”  If passed, the Bill would prevent suits to recover on the note if the statute of limitations had expired on a mortgage foreclosure action and vice versa.

A7737 would also create an amended savings statute, which applies only to mortgage foreclosure matters, the new “CPLR 205-a.”  Under the new statute, foreclosure plaintiffs will only get the benefit of the savings statute once and dismissals for failure to enter default within a year under CPLR 3215(c), for failure to appear, for failure to submit an order, and for failure to comply with an order of the court are now added to the list of dismissals explicitly exempt from protection under CPLR 205-a.  Most recently another Assembly Bill 7922 has been proposed and mirrors the proposed Senate bill.

While some of these restrictions are certainly unwelcome, this Bill is preferable to its Senate counterpart, S5473B.  While both bills include the above referenced changes,  under the Assembly proposal, voluntary discontinuances can serve as a de-acceleration of the debt provided that the discontinuance is made within six years of the acceleration and provided that the discontinuance includes text which advises of the de-acceleration and explicitly notes that the defendant may resume making installment payments.  By contrast, S5473B if enacted would limit the ability of a voluntary discontinuance to extend the statute of limitations to circumstances where the defendant explicitly consents to such extension. 

While these bills have not exited committee or been approved by the legislature, we are highlighting them, even at this early stage, as their passage would fundamentally change foreclosure practice in New York. While it appears that some form of legislation will eventually pass that addresses and clarifies how the statute of limitations will be applied going forward, in its present form, A7737, while certainly not ideal, represents a preferable solution to its Senate counterpart.  We will continue to monitor and advise on the status of this legislation.  For any questions regarding these Bills please contact Richard O’Brien, Esq.  (robrien@friedmanvartolo.com) or Deborah Gallo, Esq. (dgallo@friedmanvartolo.com).

In a recent case, Southern Acquisition Company LLC v. TNT, LLC, Supreme Court, New York, Ulster County, 2021 WL 1307854, 2021 NY Slip Op. 21084  (4/6/2021),  the mortgagee filed a motion to invalidate and find the small business’ filing of a COVID 19 pandemic related hardship declaration lacking in merit and to allow proceeding to foreclosure sale.  The Court found that the mortgage enjoyed a rebuttable presumption of financial hardship due to the COVID 19 pandemic, even though the matter entered foreclosure and judgment was granted prior to the pandemic. 

In this commercial foreclosure action, the plaintiff filed the motion to invalidate the hardship declaration and to proceed to foreclosure sale.  Defendants did not submit opposition by the return date and thus plaintiff filed a proposed order granting the motion to the Court.   The Court first indicated that not all unopposed motions or granted and further that COVID 19 impacted the global economy in many ways, particularly in New York, which took the brunt of same in the first wave hitting the United States.  Thus, the Court and Legislators quickly implemented legislation to avoid evictions and foreclosures for small businesses and residential foreclosures.

In any action to foreclosure a mortgage in which a judgment of sale has been issued prior to the effective date of the Act, like in this case, “the court shall stay the execution of the judgment at least until the court has held a status conference with the parties” (Act, Part B, Subpart A, § 8). However, where “the mortgagor provides a hardship declaration … prior to the execution of the judgment, the execution shall be stayed until at least May 1, 2021” (id.)  “A hardship declaration shall create a rebuttable presumption that the mortgagor is suffering financial hardship, in any judicial or administrative proceeding that may be brought, for the purposes of establishing a defense under an executive order of the governor or any other local or state law, order, or regulation restricting actions to foreclose a mortgage against a mortgagor suffering from a financial hardship during … the COVID-19 pandemic” (Act, Part B, Subpart A, § 10 [emphasis added]).

The Court went on to outline the long history of the action which was initially commence in April 2014.  Had the Judgment of foreclosure and sale signed August 19, 2015, followed by six cancelled foreclosure sales.   Given the timing, it was clear that the matter entered and proceeded to Judgment well prior to the COVID pandemic.   The Court found that the plaintiff had not provided evidence to rebut the presumption, but merely stated their position in a self- serving and conclusory manner. Thus, Plaintiff’s motion was denied, and the hardship declaration stay continued. 

If you have any questions regarding this matter, please contact Deborah Gallo, Director of Operations, at dgallo@friedmanvartolo.com.

I am sure you have seen or heard people saying it is a “Seller’s Market”, but what does that mean? With record low inventory on the market and fantastic mortgage rates if you are planning on selling now may be the best time to get your property listed and sold!  This will mean a ton of offers to choose from, while you can be in the drivers’ seat of the deal and cherry pick the deal that is right for you. Ensure you are ready to sell by having an experienced real estate attorney and agent by your side. Your real estate attorney can provide you with a breakdown of closing costs so you know what to expect and can determine how much you want to net from your sale.  Your attorney can also help you go through offers to choose which one best fits your needs regarding contingency requests, mortgage types and timing. A great agent can make a world of difference from staging, appropriate pricing to get the best deal and juggling incoming offers. The best price is not always the best offer, especially if there are contingencies that allow the buyer to back out months down the road. Most sales are going for well above asking with multiple bids but make sure you are ready to sell.

If you are buying, make sure you are prepared so you can present an attractive offer to sellers. It is important to have a great team by your side including a real estate attorney, real estate agent and loan officer so that you are ready to jump in once you have an accepted offer. Get your loan preapproval ready and crunch your numbers before you make an offer. Rates are low but prices may be higher so make sure you know what you can afford. Don’t jump in to buying a house head first because of great mortgage rates, go in prepared and level headed so you can get the most out of your purchase.

If you are interested in buying, selling, or refinancing please reach out and I would be happy to answer any questions you may have and help you get started!  Please contact Katherine Kokkosis, Esq. at kkokkosis@friedmanvartolo.com or call 212 471 5100. 

On Friday, May 14, 2021, Governor Phil Murphy of New Jersey issued Executive Order 240, extending the COVID-19 Public Health Emergency for an additional thirty days.  As part of the announcement the governor issued a press release (viewable here: https://nj.gov/governor/news/news/562021/approved/20210514a.shtml).  Significantly, the Governor announced that his administration is working closely with the legislature to draft legislation to allow the Public Health Emergency enacted under Executive Order 103 to expire.  Specifically the press release states that the  Administration “is working closely with Senate President Sweeney and Speaker Coughlin on legislation that will allow the public health emergency to expire,” and that if that legislation can be delivered prior to mid-June 2021, no additional extensions of the Public Health Emergency shall occur.

Should the Public Health Emergency be permitted to expire on or about June 14, 2021, the eviction moratorium enacted under Executive Order 106 shall automatically end sixty days after such expiration barring any additional unanticipated legislation. This would likely mean that all Sheriff Sales would resume on the same date.  As always, we will monitor incoming legislation and inform of you any developments as they become available.

Should you have any questions regarding this announcement, please contact Deborah Gallo, Esq., Director of Operations, at dgallo@friedmanvartolo.com.