PHH MORTGAGE CORPORATION v. BH LLC (2026)

DECISION & ORDER

In an action to foreclose a mortgage, nonparty BH Urban Group, LLC, appeals from an order of the Supreme Court, Queens County (Timothy J. Dufficy, J.), entered March 18, 2024.  The order, upon a decision of the same court dated June 22, 2023, granted the plaintiff's motion, inter alia, to deem nonparty BH Urban Group, LLC, the successful bidder at a judicial sale of the property foreclosed upon, to be in default under the terms of sale, and to direct the referee to tender a down payment to the plaintiff.

ORDERED that the order is affirmed, with costs.

In March 2016, Ocwen Loan Servicing, LLC (hereinafter Ocwen), commenced the instant action to foreclose a mortgage.  In an order and judgment of foreclosure and sale entered December 12, 2019, the Supreme Court granted Ocwen's motion to confirm a referee's report and for a judgment of foreclosure and sale and amended the caption to substitute the plaintiff, PHH Mortgage Corporation, for Ocwen.  The judgment of foreclosure and sale directed the referee to pay all “taxes, assessments, sewer rents, or water rates, which are, or may become, liens upon the property at the time of sale, with such interest or penalties which may have lawfully accrued thereon to the date of payment” from the proceeds of the sale.

On May 6, 2022, following a judicial sale at which nonparty BH Urban Group, LLC (hereinafter BH), was the successful bidder, BH executed a terms of sale to purchase the subject property and tendered the sum of $60,000 as a down payment.  The terms of sale stated that the property was being sold subject to “[a]ny and all orders or requirements issued by any governmental body having jurisdiction against or affecting said premises and violations of the same.”

On September 6, 2022, after BH failed to close, the plaintiff moved, inter alia, to deem BH to be in default under the terms of sale and to direct the referee to tender the $60,000 down payment to the plaintiff.  BH opposed the motion on the ground that the plaintiff was unable to provide marketable title to the property due to certain New York City Department of Housing Preservation and Development (hereinafter HPD) repair and heat/hot water inspection fees, which BH contends were payable from the proceeds of the sale.  In an order entered March 18, 2024, the Supreme Court, upon a decision dated June 22, 2023, granted the plaintiff's motion.  BH appeals.

“A referee lacks the authority to alter the terms of a judgment of foreclosure, and unauthorized variations between the terms of sale and judgment are void” (Cicorelli v Hickey's Carting, Inc., 66 AD3d 626, 627).  Here, the HPD charges regarding repair and heat/hot water inspection fees were not liens against the property at the time of the sale, and contrary to BH's contention, the referee was not permitted to pay them out of the proceeds of the sale (see White Oak Projects, LLC v Upreal Wash., LLC, 224 AD3d 718).  Accordingly, the Supreme Court properly granted the plaintiff's motion, among other things, to deem BH in default under the terms of sale and to direct the referee to tender the down payment to the plaintiff.

BH's remaining contentions are without merit.

LASALLE, P.J., VOUTSINAS, LOVE and HOM, JJ., concur.