Bulletin: NY000261

Date:
August 12, 2005
To:
All Issuing Offices in New York
RE:
New Section 6516 of CPLR Allows for Filing Successive Notices of Pendency in Foreclosure Actions

In 2002, the New York Court of Appeals decision in Matter of Sakow, 97 N.Y. 2nd 436, 741 N.Y.S. 2nd 175, 767 N.E. 2nd 666 held that a plaintiff may not file a notice of pendency in an action where a previously filed notice of pendency had expired without timely renewal. The court considered the language of Civil Practice Law and Rules ("CPLR") Section 6512 which allows for the filing of such a notice (as well as its renewal under proper circumstances), the history of the common law doctrine of lis pendens, as well as the practical aspects of what is a fairly extraordinary provisional remedy and decided that if a plaintiff was inattentive enough to allow a notice of pendency to lapse, then he should suffer the consequences and not be allowed to refile the notice in the same action.

At odds with the Court's decision in Sakow however, were a number of lower court cases which declined to apply the "no second chance" rule where the action underlying the subject notice of pendency was to foreclose a mortgage. Citing factors such as the existence of the recorded mortgage as an encumbrance (Sakow was a partition action) and the interaction of the Real Property Actions and Proceedings Law ("RPAPL") Section 1331 which requires a valid notice of pendency in order to have an effective foreclosure judgment, several Appellate Division decisions held Sakow inapplicable and allowed the filing of a second notice of pendency, even if the initial filing had lapsed, which in turn made for an effective mortgage foreclosure. We in the title insurance business generally followed the lower court rationale and continued to insure titles where there existed that gap in time after the lapse of the first filing and the filing of the second notice. Then we held our collective breath, hoping that the Court of Appeals did not upset our apple cart by reversing those Appellate Court decisions.

Now we can exhale. Effective August 2, 2005, Chapter 387 of the Laws of 2005 amends Article 65 of the CPLR to allow for the filing of successive notices of pendency in a "foreclosure action" as that term is specifically defined therein.

Chapter 387 adds Section 6516 to the CPLR which allows for a successive notice of pendency to be filed to comply with section 1331 of the RPAPL where a previously filed notice of pendency has expired or has become ineffective due to failure to serve a defendant with a summons within thirty days as required by CPLR Section 6512.

It also defines "foreclosure action", for the purposes of Article 65, as "…any action or proceeding in which the provisions of Section 1331 of the RPAPL are applicable or in which a similar requirement is imposed by law."

Section 6516 further provides that it is not applicable to an action to foreclose a mcehanic's lien, nor any other action, other than a foreclosure action, as defined, where a notice of pendency has expired, or been cancelled, vacated or otherwise rendered ineffective. Nor is it to be construed to make RPAPL Section 1331 applicable to in rem tax line foreclosure proceedings pursuant to Real Property Tax Law Article 11.

Lastly, Chapter 387 amends Section 1403 of the RPAPL to provide that the newly enacted Section 6516 of the CPLR shall not apply to non judicial foreclosures by power of sale.

A copy of the new statutes is attached for your reference. If you have any questions, please call company counsel.

THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER  AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.

Click http://public.leginfo.state.ny.us/menugetf.cgi?COMMONQUERY=LAWS to link to Section 6516 of the CPLR.

References

Bulletins Replaced:
None
Related Bulletins:
None
Underwriting Manual:
None
Exceptions Manual:
None
Forms:
None