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Home > Underwriting > Title News > Fourteen Volume Five

SERIES: Fourteen VOLUME: Five DATED: May, 1999


The Court of Appeals, in a recent decision, has determined that the possible lien against a condominium unit for unpaid common charges automatically expires six years from its date of filing under Real Property Law Section 339-aa, 339-z. In the action before the Court of Appeals, Chemical Bank vs. Mark L. Levine, 91NY 2nd, 738 (decided June 4, 1998), the Court reviewed the Condominium Act and lien for common charges with relation to a mortgage foreclosure concluded against the same unit which was the subject of an outstanding condo lien.

In Levine, Remsen Gardens Condominium Board of Managers filed liens for unpaid common charges against unit 604-c in December, 1988, September, 1990 and February, 1991. No steps were ever taken to foreclosure these liens. In December of 1989, the owner of the unit gave a first mortgage to Chemical Bank and that mortgage was later recorded in June of 1991. After Levine failed to meet his obligations under his mortgage, a mortgage foreclosure action was commenced by Chemical Bank in November, 1993. The Chemical Bank foreclosure named Remsen Gardens Condominium Board as a defendant because of its lien under Real Property Law Section 339-z. The defendant board then took the position that its statutory lien for unpaid common charges had priority over Chemical Bank's first mortgage. The Supreme Court granted the plaintiff's motion for summary judgment, striking the defendant's answer and holding that the plaintiff's mortgage was superior to the defendant condo board's liens for common charges and the Appellate Division affirmed that decision. The Court of Appeals thereafter granted the condo board leave to appeal the Appellate Division order.

In its decision the Court of Appeals recited that "Real Property Law Section 339-aa provides that a properly filed common charge lien 'shall continue in effect until all sums secured thereby, with interest thereon, shall have been fully paid or until expiration six years from the date of filing, which ever occurs sooner'." When the defendant condo board argued that the six year period referred to in this statute is analogous to a statute of limitations and that the running of the period is capable of being tolled by the commencement of the plaintiff's action in 1993, the Court of Appeals disagreed. The Court recited that:

"There is nothing in the language of Real Property Law Section 339-aa that supports the analysis defendant advocates. The statute does not refer to the time for commencing an action on the lien, but rather to the duration of the lien itself. Thus, its formula differs from that used in typical statutes of repose, which are aimed at suspending the judicial remedy..., and fits more aptly within the class of durational rules that operate as 'qualifications' to the right itself."

The Court of Appeals went on to say:

"Furthermore, even assuming that section 339-aa could fairly be characterized as a statute of limitations, there would be no basis for finding the existence of a toll arising from the commencement of a third-party foreclosure action, since there is not such provision in either the Condominium Act or the CPLR and there is no suggestion anywhere in the statutory scheme that the Legislature intended such a result. We are unpersuaded by defendant's suggestion that the toll in question may be inferred by analogy to Lien Law Section 17, which provides that a mechanic's lien expires one year after it has been filed unless the lienholder commences a foreclosure action. All that may reasonably be inferred from Lien Law Section 17 is that the Legislature knows how to make specific provision for the result defendant seeks when that result is, in fact, intended. We note that even if this were a case arising under Lien Law Section 17 rather than Real Property Law Section 339-aa, the commencement of an action by a party other than the lienholder would not suffice to satisfy the clear statutory requirements.

Accordingly, we conclude that the commencement of the present foreclosure action by the first mortgagee did not in any way prevent the statutory liens defendant held on the condominium unit from lapsing by operation of law six years after the date those liens were filed. Similarly, the fact that the defendant interposed the claimed priority of its liens in its answer that the plaintiffs complaint does not serve to advance plaintiff's position, since the assertion of a lienholder's interest in the proceeds of a first mortgage foreclosure is not the legal or conceptional equivalent of foreclosure on the lien.

Inasmuch as defendant Board has taken no independent steps to enforce its liens by bringing a foreclosure action within their six year lives, those liens have lapsed and, consequently, can no longer be cited as a basis for claiming a share of the proceeds of plaintiff's foreclosure action. In view of this conclusion, we do not reach defendant's argument that Real Property Law Section 339-z (ii), which gives priority to 'all sums unpaid on a first mortgage of record, does not apply where, as here, the first mortgage was not recorded until after the liens were filed. Since defendants' liens have been extinguished by the passage of time, their relative priority is now moot.

Accordingly, the order of the Appellate Division should be affirmed, with costs."

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