Foreclosure Defense Attorney in Bayside, NY (Served with Papers? Start Here)

Bay Terrace, the Bell Boulevard corridor and the garden complexes off Northern Boulevard are dense with cooperatives, and their owners are usually surprised to learn how thin the procedural protection on a co-op loan is. Because the collateral is personal property, the shares and the lease, the lender never files a foreclosure action. It accelerates the loan, sends a notice of default and, after the periods the loan documents and the statutes require, a UCC 9-611 notice of disposition stating the time and place of a public sale or the date after which a private sale may occur. The sale is held at an auction house or a law office, the lender usually bids its debt, and the successful bidder receives the shares and an assignment of the proprietary lease, subject to the co-op board's approval in most buildings.

The former owner is then a licensee in an apartment someone else holds the lease to, and the new shareholder or the co-op brings a Housing Court holdover to remove them. From the first missed payment to an auction can be under a year, and from the auction to a holdover judgment a few months more. What slows it down is the owner. New York has extended the RPAPL 1304 90-day notice to co-op loans on a borrower's principal residence, UCC 9-611(f) makes that notice a condition of a valid sale, UCC 9-610 requires every aspect of the sale to be commercially reasonable, and UCC 9-623 gives the owner the right to redeem by paying the debt and the lender's reasonable expenses before the sale. A Bayside co-op owner who acts before the disposition date can enjoin the sale in Supreme Court on Sutphin Boulevard, and once there, the lender is negotiating.

The injunction motion is the Bayside co-op owner's equivalent of the answer in a house foreclosure, and it must be filed before the shares are sold; once a commercially reasonable sale to a good-faith buyer has closed, unwinding it is very hard. The order to show cause is brought in Supreme Court in Jamaica against the lender, with a request for a temporary restraining order stopping the auction while the motion is heard. Grounds that have succeeded: the lender cannot prove it mailed the RPAPL 1304 notice to each borrower by certified and first-class mail with the counselor list, and UCC 9-611(f) makes that fatal; the notice of disposition omitted required information or gave less than the reasonable time the statute demands; the auction was scheduled at a time or place designed to depress bidding; or the payoff figure includes charges the loan documents do not allow.

Once the sale is stayed, the leverage shifts. A co-op lender does not want to own shares in a building whose board can reject its buyer, and it will negotiate a reinstatement, a repayment plan or a modification that a Bayside owner with income can carry. Where the household needs more time or a structured cure, a Chapter 13 petition in the Eastern District of New York stays the sale automatically and lets the arrears be paid over three to five years; because the co-op interest is personal property, the plan can sometimes treat the loan more flexibly than a mortgage. And where the household has the money, UCC 9-623 redemption, tendering the full debt plus reasonable expenses before the sale, ends the matter, and a lender that refuses a proper tender has no right to sell. The one thing a Bayside co-op owner must not do is wait for a court date that will never come, because there is no court date.

For a Bayside house or condo, the case runs the ordinary course in the Sutphin Boulevard courthouse in Jamaica: the CPLR 3408 settlement conferences before a court attorney referee, motions before the assigned justice, an RPAPL 1321 order of reference and a judgment of foreclosure and sale, with an auction at the courthouse if nothing settles. I have practiced foreclosure defense for 27 years, and the Queens justices have applied the standing, RPAPL 1304 and CPLR 213(4) rules rigorously to the Bayside loans that come before them, many of which were originated at the peak and sold into trusts that cannot document their chain.

For a co-op, the courthouse enters only if the owner brings it in, and a Bayside owner should. The injunction motion goes to a Supreme Court justice in Jamaica, who will consider whether the lender met RPAPL 1304 and UCC 9-611 and whether the sale is commercially reasonable, and who has the power to stop it. Justices in Queens have enjoined co-op sales on defective notices, and lenders that have been enjoined once tend to negotiate rather than try again. After an unopposed sale, the new shareholder's holdover is heard in Housing Court a few blocks away, where the former owner can still raise defects in the sale and negotiate the terms of leaving. A contested Bayside house foreclosure runs two to four years; an unopposed co-op sale can be over in months, which is the whole reason to oppose it.

The Second Department, whose rulings bind Queens, requires strict compliance with RPAPL 1304 and places the burden on the lender to prove the mailing through a witness with personal knowledge or a standard office practice the witness actually follows, and Bayside loans that changed servicers two or three times rarely come with such a witness. The defects that have defeated lenders on appeal are familiar: notices to two borrowers in one envelope, notices carrying language beyond what the statute prescribes, counselor lists for the wrong county, notices mailed to the property when the borrower had designated another address, and mailing affidavits that recite a practice without showing the affiant knew it. For a co-op, the same proof problems arise, but the consequence is different: rather than dismissal of an action, a defective RPAPL 1304 notice means the UCC disposition itself was unauthorized, and a Bayside owner can enjoin it before the sale or challenge it afterward.

RPAPL 1306 requires the electronic filing with the Department of Financial Services within three business days of the mailing, proven by the filing confirmation. In a mortgage case the plaintiff must plead and prove it; on a co-op loan the filing is likewise required, and a lender that never made it cannot show the statutory process was followed. Where either statute fails on a house or condo loan, the case is dismissed without prejudice and the lender must start the 90-day process again, and on a loan accelerated years ago the restart may fall outside the six years CPLR 213(4) allows, with the Foreclosure Abuse Prevention Act barring any claim that the acceleration was revoked. I examine the notice, the envelope and the filing confirmation on every Bayside file before anything else.

The house or condo answer pleads standing first or it is waived, the six-year limitations period under CPLR 213(4) as an affirmative defense, the RPAPL 1304 and 1306 conditions precedent, and a specific denial of the amount claimed, and it states that the borrower occupies the Bayside home so the CPLR 3408 conference is mandatory. Substituted service, papers left with a person of suitable age or affixed to the door and mailed, is complete ten days after the affidavit is filed, and the 30 days run from then. Nothing said to the servicer extends the deadline; a written stipulation from the plaintiff's attorney does, and I obtain one where a Bayside household needs time to gather income documents.

A co-op owner's calendar is harsher. The notice of default gives a cure period set by the loan documents, and once the loan is accelerated the UCC 9-611 notice of disposition names a sale date, often only a few weeks out. Everything a Bayside co-op owner wants to do, redeem, enjoin, negotiate, file a Chapter 13, must happen before that date, because a completed disposition to a good-faith purchaser is generally final. The RPAPL 1304 notice, which must precede the sale by 90 days, is the early warning; a Bayside co-op owner who receives it should treat it as the summons and call. For a house or condo owner who missed the answer deadline, CPLR 3012(d) and 5015 motions to vacate remain available with a reasonable excuse and a meritorious defense, and I bring them, but for a co-op there is no default judgment to vacate, only a sale that has or has not happened.

For a Bayside house or condominium the path is the familiar one: a modification through the conference part on Sutphin Boulevard that ends the case, a reinstatement or repayment plan where the hardship has passed, or a sale while the case is pending with the lender paid at closing and the equity kept. Bayside houses and units carry substantial equity, and the auction, with its discounted price, default interest and fees deducted first and any surplus held by the Queens County Clerk until an RPAPL 1361 claim, is the outcome every option is designed to avoid. On the rare underwater loan, a short sale requires the lender's consent and a written waiver of the deficiency under RPAPL 1371.

For a co-op the options are the same in substance and different in mechanics. A modification is negotiated once the sale is enjoined or the lender is persuaded it will be; co-op lenders have loss mitigation programs and the settlement conference, though not mandatory, can be requested. Redemption under UCC 9-623 ends the matter for a household that can raise the payoff, and a family loan or a sale of other assets is sometimes the answer. A sale of the shares before the disposition date, with the board's approval and the lender paid from the proceeds, preserves the equity the auction would destroy; Bayside co-ops sell quickly and the lender will usually adjourn a sale for a signed contract. A Chapter 13 petition stays the disposition and cures the arrears over time. After an unopposed sale, the former owner's remaining leverage is in the Housing Court holdover, where the defects in the sale are raised and a paid move-out is negotiated. I would much rather be called before the sale.