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Home > Underwriting > Title News > Seventeen Volume Twelve

SERIES: Seventeen VOLUME: Twelve DATED: December, 2002

~ LAW FIRM HELD RESPONSIBLE FOR MORTGAGE SATISFACTION ~

A recent Appellate Division decision, Old Republic Title v. Santangelo & Cohen (Appellate Division, First Department, decided November 12, 2002) awarded a title company a recovery against a law firm in the amount $48,107.18 to satisfy a mortgage on property purchased by its insureds on the basis of the law firm's written agreement to provide Old Republic a mortgage payoff receipt and "provide proof of said payment to [plaintiff's agent] and have a satisfaction of mortgage in recordable form forwarded to [plaintiff's agent]".

The decision of the Court in the Old Republic action is as follows:

"Defendants were members of a now defunct law firm that represented the sellers in a real estate transaction. It appears that plaintiff agreed to insure title subject to the condition that a mortgage in the amount of $104,000 be satisfied, but that no payoff letter from the mortgagee had been obtained by the time of the closing. The action is based on a written agreement signed by one of the defendants at the closing 'undertak[ing] to provide to [plaintiff's agent] within thirty days a payoff receipt for the mortgage referred to [in the title policy],' and to 'hold the sum of $110,000 in escrow to pay off said mortgage and upon paying said amount due provide proof of said payment to [plaintiff's agent], and have a satisfaction of mortgage in recordable form forwarded to [plaintiff's agent].' It further appears that defendants did not satisfy the mortgage within 30 days; that plaintiff subsequently obtained from the mortgagee a payoff figure of $158,107.18, which amount it demanded from defendants after the mortgagee commenced a foreclosure action against its insureds; and that defendants paid plaintiff $110,000, claiming that such payment satisfied their obligation under the subject writing. The motion court correctly held defendants liable for the full amount required to satisfy the mortgage. Although the subject writing called for defendants to put only $110,000 into escrow, their obligation to satisfy the mortgage was not limited to that amount and was not to be absolved in the event they were unable to learn of the payoff figure within 30 days. This meaning is unambiguously conveyed by defendants' promise to provide plaintiff with a 'payoff receipt' and 'satisfaction of mortgage in recordable form.' It does not avail defendants to assert that the mortgagee did not respond to their requests for a payout figure . . . We have considered defendants' other arguments and find them unavailing.

THIS CONSTITUTES THE DECISION AND ORDER OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT."

~ RESERVED ACCESS EASEMENT UPHELD FOR TAX PURCHASERS ~

In a recently decided Appellate Division case, O'Malley v. Hill and Dale Property Owners, Inc. (Appellate Division, Second Department, decided November 12, 2002) the Appellate Court upheld a lower court decision which granted two contract vendees (under a tax deed) an easement which had been reserved by a predecessor in title for ingress and egress to and from the tax foreclosed premises. The pertinent facts and the decision in this quiet title action are as follows:

"On December 5, 1928, Ralph Palmer, owner of a parcel of real property (hereinafter the subject lot) located in the Town of Carmel in Putnam County, conveyed the subject lot to Hill and Dale Country Club, Inc. (hereinafter HD) by warranty deed recorded on January 7, 1929. HD also owned certain real property consisting of the 'roads, streets, trails, lanes, paths or highways' (hereinafter the roads) that were contiguous to various parcels of real property, including the subject lot. On October 30, 1930, HD conveyed its interest in the roads to the defendant Hill and Dale Property Owners, Inc. (hereinafter Property Owners) by way of a bargain and sale deed dated October 30, 1930, and recorded on June 9, 1931 (hereinafter the 1930 deed). In the 1930 deed, HD reserved the right to have 'free and unobstructed use of any and all' of the roads around the subject lot, and subject further to the right of [HD] to sell and convey to other persons, firms or corporations the right to use said' roads. The 1930 deed further provided that the use of the roads extending around the subject lot included 'ingress and egress by foot or in vehicles.'

Many years later, HD defaulted in the payment of taxes on the subject lot, and on February 1, 1996, a deed was recorded which bestowed title to the subject lot in the County of Putnam (hereinafter the County). The plaintiffs, Patrick O'Malley and Beth O'Malley, were the highest bidders in the auction conducted by the County. When the plaintiffs sought to obtain title insurance on the subject lot, they were advised that the subject lot was not insurable due to a potential problem concerning rights of ingress and egress. The plaintiff then asked for Property Owners' consent for ingress and egress over their roads. When the plaintiffs' requests were refused, they commenced the instant action. By notice of motion dated January 19, 2001, the plaintiffs moved for summary judgment, seeking a declaration that they had an easement over Property Owners' roads for the purpose of ingress and egress. By order dated May 15, 2001, the Supreme Court granted the motion, finding that the plaintiffs proved that the easement was specifically reserved by HD for the subject lot and is enforceable against Property Owners. The Supreme Court further held that Property Owners' speculative claims in opposition to the plaintiffs' motion failed to raise any triable issues of fact. We affirm.

Contrary to the contention of Property Owners, the plaintiffs, as the contract vendees of the subject lot, had standing to commence this action . . .

The extent of an easement claimed under a grant is generally determined by the language of the grant . . . The terms of the grant 'are to be construed most strongly against the grantor in ascertaining the extent of the easement' . . . An easement granted in general terms must be construed to include any reasonable use, provided the use is lawful and it is contemplated by the grant . . . The plaintiffs demonstrated prima facie entitlement to summary judgment, in that the language of the grant in the 1930 Deed indicates that HD specifically reserved the rights of ingress and egress across the roads and paths deeded to Property Owners. Thus, the Supreme Court properly determined that 'all the surrounding circumstances and evidence' . . . sufficiently indicated an intent on the part of the grantor to create an enforceable easement... In opposition to the plaintiffs' prima facie showing of entitlement to summary judgment, Property Owners submitted a conclusory affidavit which was insufficient to raise a triable issue of fact. Accordingly, the Supreme Court properly granted the plaintiffs' motion, in effect, for summary judgment on the complaint insofar as asserted against Property Owners."


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