The timeline of a foreclosure in New York will vary based on the circumstances. Some uncontested foreclosures may only take a few months, while other complex cases may take years to conclude. During a pending case, there is a chance that something may happen to a homeowner and they may pass away. So, what happens to the foreclosure action if a defendant dies?
The answer, as with most legal questions, is that it depends on the circumstances. Was the mortgage jointly owned and the foreclosure action against both borrowers? Had the court already entered a judgment and granted a sale? The following will explore how the death of a defendant may affect a foreclosure case in different scenarios.
Commonly, married spouses hold title to property as tenants by the entirety and both sign the mortgage. Therefore, when a lender brings a foreclosure action, it must include both spouses as defendants to the action. When one spouse passes away during the case in this situation, it may hardly affect the matter at all.
Take, for example, Wells Fargo Bank v. Daley, INDEX NO.: 18259/2013 (N.Y. Sup. Ct. 2017). In this recent case, one of the married defendants died while the foreclosure was pending, and the surviving wife moved to stay the action. The court found the following was true:
- The spouses owned the property as tenants by the entirety
- The death of one tenant by the entirety passes on the entire ownership interest of the property to the surviving tenant
- A mortgagor who conveys all their interest in the mortgaged property to another (such as upon death) is not a necessary party to a foreclosure action
- For the above reasons, the defendant’s death did not affect the merits of the case, so the action does not have to be stayed if the lender discontinues the action against the deceased defendant
This case also points out that the court may have to halt the action if the lender was seeking a deficiency judgment as part of the action. However, Wells Fargo waived its right to seek a deficiency, so that issue did not apply in this matter. Simply put, in many cases, a foreclosure case can continue against the defendant who inherited all ownership interests if the other defendant passes away.
Sole Ownership or Tenants in Common
The situation can become much more complicated when a defendant owned the property alone or as tenants in common. In such a situation, the death would not discontinue the decedent’s ownership rights, which would be part of their estate. Therefore, the death of the defendant would affect the merits of the case, and the plaintiff would need to take further action.
New York Civil Practice Law and Rules (CPLR) § 1015 states that “If a party dies and the claim for or against him is not thereby extinguished the court shall order substitution of the proper parties.” New York courts have long established that an action cannot simply continue against a decedent’s estate, as there is no longer personal jurisdiction. Instead, the plaintiff must substitute the estate administrator or representative as appointed by the Surrogate’s Court. When “there is no attempt to revive the action by substituting the representative, the court lacks jurisdiction to enter any judgment at all.” (Matter of Einstoss, 26 NY2d 181.)
First, the plaintiff must provide proof of the death to the court and file a motion for substitution of the parties. A plaintiff can prove the death of a defendant by presenting a death certificate, which they can request from the NYS Department of Vital Records, the City of New York Health and Mental Hygiene, or a local municipality where the death took place. However, a death certificate can take about six months to become available. In some cases, plaintiffs have used published obituaries or even police reports indicating the death occurred. Plaintiffs may also use letters testamentary issued by the Surrogate Court overseeing the administration of the decedent’s estate.
The plaintiff must then determine who the Surrogate Court appointed in charge of the decedent’s estate. Simply because the decedent named someone as an estate administrator in their will does not mean that person may be substituted until the Surrogate Court formally appoints them. Once an appointment occurs, the mortgage lender may seek for the specific substitution of parties. The substituted party must then be properly served with the complaint and a summons as required by New York Real Property Actions and Proceedings Law (RPAPL) § 1303, and the substituted party will have all due process rights and procedural safeguards as a party to the case.
After a Foreclosure Judgment
On the other hand, if the court already ordered a foreclosure judgment and granted a sale prior to the death of a defendant, the plaintiff does not have to take any additional action. The law does not require any substitution of the estate administrator for the defendant in this situation. Instead, the judgment will continue to be binding on all interested parties and have full force and effect despite the death.
If a party passes away during a foreclosure action, it can be difficult to know what to do. In some cases, you can challenge the continuance of the action unless the lender takes the necessary steps under the law. The case will certainly experience a delay while the lender proves the death, and there may be other options that surviving defendants or heirs can take. This is only one of many unforeseen complications that can occur during a foreclosure action, so you should always have qualified representation to help identify your rights and options under your particular circumstances.
Contact a Long Island Foreclosure Defense Lawyer Right Away
The foreclosure defense attorneys at the Law Office of Ronald D. Weiss handle foreclosure cases involving a wide range of circumstances. If you are facing foreclosure or believe a case may be in your future, do not wait to call (631) 271-3737 or contact us online today.