Rabbi Has No Standing to Stop Foreclosure, Judge Rules

, New York Law Journal

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Congregation Atzel Chaim of Siget, led by Rabbi Jacob Teitelbaum, serves a Hasidic Jewish sect of more than 300 people in the Borough Park section of Brooklyn. The building is facing foreclosure.
Congregation Atzel Chaim of Siget, led by Rabbi Jacob Teitelbaum, serves a Hasidic Jewish sect of more than 300 people in the Borough Park section of Brooklyn. The building is facing foreclosure.

A Brooklyn rabbi does not have the authority to stop foreclosure of the synagogue where he lives and leads a congregation because his name was left off the mortgage and other documents, a judge recently ruled.

Congregation Atzei Chaim of Siget argued that Valley National Bank's foreclosure on the premises was faulty because, among other things, it did not name Rabbi Jacob Teitelbaum as a party in the action even though he was the property's "true owner" while the congregation was "really a nominee for [Teitelbaum], who is the essence of the congregation."

But Brooklyn Supreme Court Justice Carolyn Demarest (See Profile) rejected the argument, noting Teitelbaum—though living there with his wife and eight children—was not a signatory to the loan's promissory note or mortgage.

"As Teitelbaum is not an indispensable party, summary judgment is not precluded by the failure to join him as a party," she wrote in Valley National Bank v. Congregation Atzei Chaim of Siget, 503142/12, as she granted the bank's summary judgment motion and an order of reference in a Jan. 3 decision.

The congregation serves a Hasidic Jewish sect of more than 300 people in the Borough Park section of Brooklyn.

In 2008, the congregation borrowed $499,000 from State Bank of Long Island, which later merged into and operated as part of Valley National Bank.

In court papers, the congregation said the premises had a "dual capacity" of being the "shtiebel"—or site of community prayer and association—and the rabbi's residence. "This dual property function has existed since about 1970, when the present Rabbi's grandfather established the Congregation at its present location. In such Hasidic sects, the Shtiebel is the Rabbi's home and his presence is the essence of the Shtiebel." The congregation said when it entered the mortgage, the bank was informed of Teitelbaum's residence at the site.

Demarest noted the mortgage "expressly indicates" the property is not improved as containing dwelling units "nor does the name Teitelbaum appear anywhere in the mortgage documents."

After the congregation's default, the bank commenced the foreclosure in 2012.

The congregation claimed the action was a residential foreclosure, not a commercial one, because of Teitelbaum's residence. As a result, the congregation argued the bank had to give it and Teitelbaum special notice pursuant to provisions of the New York Real Property Actions and Proceedings Law applying to residential foreclosures.

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