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Adam Leitman Bailey, P.C. Saves the Collateral Security of a Mortgage Loan from Total Loss


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In Federal National Mortgage Association v. Dennis Papa, Jr., et al., a defendant and predecessor in title to the borrower (“Claimant”) moved to vacate judgment of foreclosure, claiming he owned fee title to the collateral property. Our client had given a mortgage loan to different defendant, the Claimant’s mother (“Mother”). Claimant had not executed the mortgage and alleged he had not consented or ratified it, either. Claimant alleged that his Mother owned only a life estate in the collateral and he sought to set aside the judgment so that when the property was sold at foreclosure auction, only a life estate with a negligible value could be sold to satisfy the debt.

Claimant became owner of the collateral property by deed from his Mother in 1985. On the same day, Claimant alleged he conveyed back a life estate to his Mother. The deed from Claimant to his Mother recited that title was transferred:

For the term of the natural life of [Mother] and for the natural life of [Mother’s husband] so long as he shall remain married to [Mother].

TO HAVE AND TO HOLD to the parties of the second part for and during their natural lives …

Since Claimant alleged that his Mother had only a life estate in the property and he did not execute the mortgage, he alleged that the mortgage did not encumber his reversionary interest as the fee owner.  Therefore, according to Claimant, the mortgage was secured by only a life estate and upon the death of his Mother any title to the property sold at the foreclosure auction would revert to him, leaving the mortgage as an unsecured debt.

The Adam Leitman Bailey, P.C. team parsed the terms of the deed and dug into old New York real property law. The team explained to the court that the “habendum clause” in the deed, reciting “to have and to hold” is the usual form of conveying fee title to the property. Under New York law, the habendum clause for a deed conveying a life estate generally conveys the property “to use and occupy.”  In addition, the team explained that under New York law a life estate cannot be conveyed on a condition. Therefore, the team concluded that the condition that the Mother and her husband remain married negated a life estate.

The Court agreed, finding that the deed, despite purporting to convey the property for the “natural life of” the Mother, actually conveyed the fee title back to the Mother. Therefore, the borrower-Mother had actually mortgaged the whole property to secure the debt and not just a lesser life estate. As a result of the Adam Leitman Bailey, P.C.’s thorough examination and attention, our client’s mortgage is fully secured by the property and the team stopped the Claimant from achieving a windfall by acquiring the property from his Mother, unencumbered by our client’s mortgage.

Colin E. Kaufman, Esq. and Adam M. Swanson, Esq. defeated the motion by Dennis Papa.

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Adam M. Swanson Colin E. Kaufman

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Adam Leitman Bailey, P.C.

NEW YORK REAL ESTATE ATTORNEYS