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Adam Leitman Bailey, P.C. Vacates Covid-19 Hardship Declaration Filing Stay in a Case of First Impression

Adam Leitman Bailey, P.C. Vacates Covid-19 Hardship Declaration Filing Stay in a Case of First Impression

Courtney J. Lerias

Courtney J. Lerias

January 5, 2022 12:29 PM

Adam Leitman Bailey, P.C. was retained by a lender to commence foreclosure proceedings against a borrower LLC on a residential property. Notably, the LLC’s member specifically represented at origination that the mortgaged premises would be an investment property and executed an occupancy affidavit to that effect.

Lender was granted summary judgment and an Order of Reference in the action, the Referee reported the Amount Due, and the Lender then moved for a Judgment of Foreclosure and Sale. Before the motion for a Judgment of Foreclosure and Sale was decided, the Borrower filed a Hardship Declaration under the Covid-19 Emergency Eviction & Foreclosure Prevention Act of 2020 (the “Act”) in order to stay the action from proceeding.

Adam Leitman Bailey, P.C. aggressively moved to vacate the stay, arguing, among other things, that the Borrower was not a natural person, and, therefore, the Act does not apply on its face.

In opposition, the member of the LLC argued that she should not “be deprived of the protection of her primary residence merely because of technicality regarding the identity of the owner recited on the deed.”

On reply, Adam Leitman Bailey, P.C. argued that the member of the LLC specifically agreed at origination to not reside at the mortgaged premises and provided documents executed by the member in support, including an occupancy affidavit and a business purpose affidavit. The argument continued that the member of the LLC, who misrepresented at origination that she would not occupy the mortgaged premises, should not now receive the protections of the Act.

The Court adopted Adam Leitman Bailey, P.C.’s arguments holding that the owner and mortgagor here was a limited liability company, not a “natural person” and, thus, the Act does not apply. The Court referenced that the member was entitled to avail herself of the benefits of the limited liability company law in acquiring title and, therefore, cannot now seek protections under the Act, which protections are specifically intended to benefit owners and mortgagors of residential property, who are “natural persons."

Concurrently, with the granting of the motion to vacate the Covid-19 Hardship stay, the Court also granted the lender’s motion for a Judgment of Foreclosure and Sale.

Jackie Halpern Weinstein, Esq., Danny Ramrattan, Esq., and Courtney Lerias, Esq. of the Foreclosure Litigation Group at Adam Leitman Bailey, P.C. pioneered this law and secured this remarkable result for its client.

Original Article

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