MINICOZZI v. HEFFERNAN (2018)

ORDERED that the final judgment is reversed, without costs, and the matter is remitted to the District Court for the entry of a final judgment awarding landlord possession and the principal sum of $4,400.

In this nonpayment proceeding commenced in August 2016, the petition alleges that tenant owes rent at the rate of $2,200 per month for the months of June and July 2016 pursuant to a written lease that had been executed on January 28, 2016 for the rental of a private house. Tenant did not interpose an answer, and a default final judgment was entered against him in the principal sum of $4,400 on August 19, 2016. In support of a motion to vacate the default final judgment, tenant asserted, as a meritorious defense, that landlord was not the owner of the property after July. It is undisputed that the property had been bid upon at a foreclosure auction on July 15, 2016 and that tenant did not vacate the premises until October 1, 2016. Following the vacatur of the default judgment, a nonjury trial was held, at which tenant failed to establish that the property had been transferred pursuant to a referee's deed. After the trial, the District Court dismissed the petition, noting that tenant's moving expenses and the broker's fee he had incurred exceeded the amount to which landlord would be entitled. On appeal, landlord argues, among other things, that landlord is entitled to the rent even though the property was in foreclosure.

Where a mortgagee has not taken possession or obtained the appointment of a receiver, the rents generated by the mortgaged property belong to the lessor until he is divested of ownership by virtue of a foreclosure sale (see Dulberg v. Ebenhart, 68 AD2d 323, 327 [1979]; Levraad Realty Corp. v. James F. Ogden, Inc., 226 App Div 675 [1929]; see also 79 NY Jur 2d, Mortgages § 854). Here, it appears that no receiver had been appointed, and tenant, who did not submit a referee's deed, failed to meet his burden, upon his challenge to landlord's proof of ownership, of showing that landlord had been divested of title by virtue of a foreclosure sale. In view of the foregoing, and as tenant interposed no counterclaim for his moving expenses or broker's fee, the final judgment is reversed and the matter is remitted to the District Court for the entry of a final judgment awarding landlord possession and the principal sum of $4,400.

GARGUILO, J.P., MARANO and RUDERMAN, JJ., concur.