Lance R. Pomerantz
Attorney at Law

Land     Title     Law

“Constructive Notice”  The  Newsletter

Excerpted from the April 20, 2015 mailing of "Constructive Notice":

Co-op Leases Under Article 15

The Cooperative Unit should be treated as personal property governed by article 9 of the UCC rather than real property governed by RPAPL § 1501(1). 523-527 West 143ro Street Housing Development Fund Corporation v. U.S. Bank National Association, 2015 NY Slip Op 30516(U) (Sup. Ct., N. Y. Cty. (Kern, J.) Apr. 7, 2015).

Plaintiff is a residential low-income housing cooperative corporation. Following the eviction of the previous tenant-shareholder under the proprietary lease, Plaintiff entered into an agreement to sell the apartment to a new tenant-shareholder. The iien search revealed a UCC-1 filing statement securing a loan to the evicted shareholder. Plaintiff then commenced the instant action pursuant to RPAPL Article 15 seeking a declaration that the mortgage was null and void.

The Court found this action is in effect an action to determine the priority of plaintiff and US Banks' interests in the shares of the Cooperative Unit. Because the RPAPL governs only adverse claims with respect to real property, the rationale applied in State Tax Commission v. Shor, 43 N.Y.2d 151 (1977) [unsecured judgment liens on co-op shares] and Fundex Capital Corp. v. Reichard, 172 A.D.2d 420 (1st Dept 1991) [post-loan default eviction from co-op governed by UCC Article 9 rather than RPAPL Article 7] is also applicable here.