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.
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