News & Insights

Homeowner Has Right To Notice Before Lender Can Foreclose

Long before COVID, New York law protected homeowners from foreclosure by requiring that lenders take certain steps prior to commencing legal action. One of these steps involves giving advance written right to notice to the homeowner. In a recent decision, a New York appellate court clarified the rules regarding notice and confirmed that lenders must strictly comply with the law or face dismissal of their lawsuit.  

New York’s Real Property and Proceedings Law (“RPAPL”) § 1304 requires that a lender provide 90 days’ written notice to a borrower prior to the commencement of legal action seeking to foreclose a home loan. The statute states the form of notice which must be sent and the language that must be included in the notice. Further, it provides that the right to notice must be sent “separate from any other mailing or notice.”  

In Citimortgage v. Dente, Plaintiff filed suit against the Defendants seeking an order and judgment of foreclosure and sale of the property. Prior to bringing the action, Plaintiff attempted to comply with the 90-day notice requirement. However, the right to notice not only included all of the language required by the statute but also added some “extraneous” language referencing what would happen if the loan had been discharged in bankruptcy or was subject to a bankruptcy stay. 

Plaintiff made a motion for summary judgment asking the judge to rule in its favor. In opposing the motion for summary judgment, the Defendants failed to raise the argument that the lender did not comply with RPAPL § 1304 when it added the extraneous language to the notice letter. As a result, the trial judge granted summary judgment to the Plaintiff. Defendants subsequently raised the lender’s faulty notice in a later motion to vacate the order and judgment of foreclosure and sale, but the lower court denied their motion on the grounds that it was made too late.  

Defendants appealed both the grant of summary judgment to Plaintiff as well as the denial of their motions. On appeal, the New York Appellate Division Second Department found that Plaintiff’s “failure to comply with RPAPL § 1304 is a defense that may be raised at any time prior to the entry of a judgment of foreclosure and sale.” Because the motion to vacate was made prior to the entry of the judgment of foreclosure and the sale of the property, the Court held that Defendants had timely raised Plaintiff’s non-compliance with RPAPL § 1304. Accordingly, the lower Court should have granted them summary judgment and vacated the order and judgment of foreclosure.  

As noted by the Court, the statute requires that no additional information be included in the same envelope as the notice required under § 1304. By adding the additional language to its letter, Plaintiff failed to strictly comply with the statute. As a result, assuming the statute of limitations had not yet run, Plaintiff would need to send a proper notice prior to commencing a new action for foreclosure. 

It is of note that this action was commenced prior to the current pandemic, meaning that this is not a decision based upon any of the additional protections for homeowners which have been recently enacted. The purpose of RPAPL § 1304 is to provide greater protections to homeowners confronted with foreclosure under any circumstances.  

In the event you are involved in a foreclosure proceeding or just want to confirm what your rights are and that the same are being properly protected, please contact one of our litigation attorneys.