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Owners of Foreclosed Condo Can’t Return, Judge Concludes

By: Ben Bedell

October 14th, 2014

A claim by owners of a condominium that they were illegally locked out of their apartment was rejected by a Manhattan Housing Court judge who noted that the apartment was in foreclosure and their eviction was inevitable.

Judge Jack Stoller said three factors “weighed heavily” in his decision not to restore possession to Lourdes Lejano and her family: the fact that none of the petitioners maintained the premises as their “actual home;” that the individual who was locked out, Lujano’s niece, did not appear at the proceeding; and that the owners admitted they were holding onto the unit solely to forestall a bankruptcy auction in order to get a better price for it.

Stoller also said in Penaflorida v. The Copely Condominium and Club, 66465/2014, that the petitioners had failed to pay more than $100,000 in common charges plus interest of about $200,000.

Three family members who jointly owned the unit appeared pro se and said they were locked out of the apartment by the condo association in May. Lejano, who testified at a multi-day trial for the family, asserted the foreclosure action was irrelevant since the condominium association was not a party to it.

Lujano did not dispute that the mortgage lender had foreclosed on the unit in 2009, nor that she and her co-owners had filed a series of personal bankruptcy petitions in order to forestall a court-ordered auction of the apartment.

According to the condominium’s attorney, Adam Leitman Bailey, foreclosed condo owners can “game the system” in order to “live for free” in the apartments. “They also have an incentive to wait until prices increase and then sell the unit,” he said.

Bailey noted that condominium associations are second lien holders and rarely recover any of the unpaid common charges after a foreclosure sale. He said it takes, on average, 23 months to foreclose on a property in New York state.

Stoller ruled that “restoration is not an appropriate remedy, even when there has been a wrongful eviction where return would be futile and where restoration would only forestall the inevitable eviction.”

He noted that Lujano admitted her family had occupied the premises only sporadically after the September 2009 foreclosure. Lujano’s niece had been allowed to live in the unit while she went to cooking school.

The 160-unit condominium, built in 1987, is located near Columbus Circle, one of Manhattan’s most expensive neighborhoods. According to recent sales data, units are currently selling for between $1 million and $4 million.

Stoller also held that even though the petitioners did not actually have possession at the time they began the proceeding, they nevertheless had standing to bring it.

“The important aspect of petitioner’s status at the subject premises was the right of possession; physical possession was unnecessary,” he said, citing Lyke v. Anderson, 147 A.D. 18 (2nd Dept. 1989).

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