RPAPL § 1351(1) requires that a foreclosing lender hold a foreclosure sale within 90 days of the date that the lender obtains a judgment of foreclosure and sale. However, there are various procedural mechanisms a borrower can employ to delay such a sale. Adam Leitman Bailey, P.C. is well-versed in navigating the issues.

In a recent case, after the foreclosing lender successfully obtained a judgment of foreclosure and sale and thereafter scheduled an auction of the mortgaged premises, the borrower filed a Chapter 13 bankruptcy proceeding, automatically staying the foreclose sale under the Bankruptcy Code. Using its bankruptcy expertise, Adam Leitman Bailey, P.C. promptly moved for relief from the automatic stay on the grounds that: (a) the borrower had no equity in the property; and (b) reorganization was impossible on the grounds that the borrower’s stated monthly income was wholly insufficient for her to make payments under the mortgage, thus demonstrating that the Chapter 13 petition was filed in bad faith, solely to delay the lender in proceeding with a foreclosure sale. The Bankruptcy Court granted Adam Leitman Bailey, P.C.’s motion, and Adam Leitman Bailey, P.C. re-noticed the foreclosure sale.

The borrower then filed a second Chapter 13 proceeding on the eve of the auction, again staying the sale. In that second proceeding, because: (a) there was even less equity in the property than there was at the time the Court granted Plaintiff’s motion for stay relief in the first bankruptcy proceeding; (b) the borrower reported even less net income than she did in the first bankruptcy petition; (c) the property was not necessary for an effective reorganization; and (d) the borrower did not prove sufficient income to make payments under the mortgage, the Bankruptcy Court dismissed the case as entirely meritless.

Adam Leitman Bailey, P.C. then moved in the foreclosure action for an extension of time to hold the foreclosure sale. In an exercise of pure audacity, the borrower opposed the motion and cross-moved to dismiss the foreclosure action on the grounds that the lender failed to hold the foreclosure sale within 90 days of the date of the judgment of foreclosure and sale, as required by RPAPL § 1351(1). Of course, in opposition to the borrower’s cross-motion, Adam Leitman Bailey, P.C. pointed out to the Court the patent absurdity of the borrower’s argument: that because she successfully prevented Plaintiff from moving forward with its foreclosure sale through the filing of multiple bankruptcies, in none of which did she comply with any of her obligations under the Bankruptcy Code, and all of which were filed in a transparent effort to stall Plaintiff from exercising its rights under the judgment of foreclosure and sale, her exploitation of the bankruptcy process should be rewarded with the dismissal of the foreclosure. And, utilizing its adept knowledge of foreclosure law, Adam Leitman Bailey, P.C. directed the Court to the various case law which supported its position that delays of foreclosure actions due to a borrower’s filing for bankruptcy, appeal, or other conduct on the part of the borrower constitute good cause for an extension of time to hold a foreclosure sale under RPAPL § 1351(1).

The Court agreed with Adam Leitman Bailey, P.C., holding that Adam Leitman Bailey, P.C. was “correct that… to reward a defendant for delay she caused would be inequitable.”

Jackie Halpern Weinstein, Esq. and Courtney J. Lerias, Esq. of the Foreclosure Litigation Group at Adam Leitman Bailey, P.C. successfully achieved this favorable result for the client.