Cite as: Zara Realty Holding Corp. v. Brittany's Villa Corp., 17134/2009, NYLJ 1202585572757, at *1 (Sup., QU, Decided October 16, 2012)

Justice Robert J. McDonald

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Decided: October 16, 2012


Attorneys for Plaintiff: Law Office of Michael G. McAuliffe, Melville, NY.

Attorneys for Defendant: Brittany's Villa Corp., Akhilesh Krishna, Esq., S Richmond Hill, NY.

The following papers numbered 1 to 16 were read on this motion by plaintiff, ZARA REALTY HOLDING CORP., for a judgment of foreclosure and sale:

Papers Numbered

Notice of Motion-Affirmation-Affidavits-Exhibits1-8

Affirmation in Opposition-Affidavits-Exhibits9-12

Reply Affirmation13-16




Upon the foregoing papers it is ordered that this motion is determined as follows:

This is a motion made by plaintiff, ZARA REALTY HOLDING CORP., seeking a judgment of foreclosure and sale for the property located at 184-56 Hovenden Road, Jamaica, New York. Based upon the record before this court, the defendant, Brittany's Villa Corp., entered into a second mortgage in favor of the plaintiff on August 17, 2006 to secure payment of the principal sum of $125,000. Gavin Reid, also signed a guaranty of payment of the note and the mortgage securing the note. The deed lists David Samnauth as the seller of the property and




Brittany's Villa Corp. as the buyer of the premises. The defendant is alleged to have defaulted in payment of the mortgage on August 31, 2007 at which time the entire balance was due and payable.

Plaintiff subsequently brought an action to foreclose its mortgage by filing a summons, complaint and lis pendens on June 29, 2009. Defendant failed to serve an answer or appear in the foreclosure action. On April 15, 2010, the plaintiff moved pursuant to RPAPL 1321, for an order of reference which was granted by this Court by decision dated May 14, 2010. The order of reference was signed on November 9, 2010 and appointed Martha Taylor, Esq. as referee to compute the sums owed. The Referee issued her report on December 28, 2011.

The plaintiff now submits a copy of the Referee's Oath and report and moves for a Judgment of Foreclosure and Sale.

Gavin Reid, President of defendant, Brittany's Villa Corp., submits an affidavit, dated August 29, 2012, stating that the motion for a judgment of foreclosure and sale must be denied because of certain misstatements contained in the plaintiff's motion. Specifically, Mr. Reid contends that the statements contained in the motion which refer to the mortgage as a "commercial building loan" and a "commercial mortgage" are incorrect as the premises, located at 184-56 Hovenden Road, is a one-family residence in which he has resided with his wife and two children since August 17, 2006. Defendant also submits documents showing that when the deed was recorded the property was described as a one-family dwelling. Mr. Reid states that as the premises are residential and owner occupied, the pre-commencement notice requirements for residential foreclosure proceedings, set forth in RPAPL §1303, must be satisfied. Defendant alleges that as the plaintiff treated this action as a commercial foreclosure action and failed to provide the defendant with the statutory notices as required in residential foreclosure actions, the motion for a judgment of foreclosure should be denied. Further, defendant requests that he be permitted to file a late answer which contains affirmative defenses such as the failure to provide statutory notice. Defendant also alleges that the transfer was made to the corporation under duress as the plaintiff allegedly would not advance any funds without a corporate transfer.

In reply, the plaintiff contends that the defendant, who was served on July 21, 2009 by service upon the Secretary of State, failed to answer the summons and complaint and has been




in default since September 2009. Further, plaintiff submits a copy of the mortgage and mortgage note, dated August 17, 2006, which states that for value received, Brittany's Villa Corp., with its principal place of business at 184-56 Hovenden Rd. Jamaica Estates N.Y., promises to pay Zara Realty Holding Corp the principal sum of $125,000. The note was executed by Gavin Reid as President of Brittany's Villa Corp. Plaintiff contends that this action is based upon a commercial loan transaction, as the sole borrower is a corporation and therefore the loan does not qualify as a home loan subject to Banking Law 6L. In addition, citing RPAPL §1304, plaintiff contends that this action is not a residential mortgage proceeding because pursuant to the requirements of RPAPL 1304, to qualify as a "home loan," the borrower must be a natural person.

Plaintiff's counsel also asserts that Brittany's was represented by counsel at the closing, that there was no duress and that this was a bona fide arms length transaction. Plaintiff also opposes the defendant's request to file a late answer stating that plaintiff has not affirmatively moved to vacate its default or moved for an extension of time to appear or plead. Finally, plaintiff asserts that the defendant has waived any affirmative defenses it may have by failing to serve a timely answer to the complaint.

Upon review and consideration of the plaintiff's motion for a judgment of foreclosure and sale, the defendant's affirmation in opposition and the plaintiff's reply thereto, this court finds that the motion for a judgment of foreclosure and sale is granted.

CPLR 3408 requires a mandatory settlement conference in every "residential foreclosure action" involving a home loan as defined in RPAPL 1304 "in which the defendant is a resident of the property subject to foreclosure." In addition, RPAPL §1304 is applicable to any "home loan," as defined in subdivision (5) (a) of that section (see Aurora Loan Servs., LLC v. Weisblum, 85 AD3d 95 [2d Dept. 2011]). RPAPL §1303(1) requires that the "foreclosing party in a mortgage foreclosure action, which involves residential real property consisting of owner-occupied one-to-four-family dwellings shall provide notice to the mortgagor…with regard to information and assistance about the foreclosure process."

However, RPAPL section 1304(5)(a) defines a qualifying "home loan" as one in which the borrower is a "natural person"; the borrower incurs the debt "primarily for personal, family or




household purposes"; and the loan is secured by a mortgage on real property in this state "used or occupied, or intended to be used or occupied wholly or partly, as the home or residence of one or more persons and which is or will be occupied by the borrower as the borrower's principal dwelling" (RPAPL §1304[5] [a][i]-[iv]).

Here, inasmuch as the borrower of the subject mortgage was a corporate entity and not a natural person and as the corporate borrower stated that its principal place of business was at the subject address, this loan does not qualify as a "home loan" as defined in RPAPL §1304. Thus, the defendant was not entitled to a settlement conference nor was plaintiff was under an obligation to serve defendant with a notice pursuant to RPAPL 1304 as a condition precedent to suit (see Emigrant Mtge. Co., Inc. v. Turk, 895 NYS2d 722 [2d Dept. 2010]).

Defendant's request to vacate its default and extend its time to answer is denied as the defendant has failed to make an affirmative motion or cross-motion seeking said relief nor has the defendant shown a reasonable excuse for its failure to serve an answer or a meritorious defense (see CPLR 5015[a][1]; U.S. Bank N.A. v. Stewart, 97 AD3d 740 [2d Dept. 2012]; Fremont Inv. & Loan v. Bertram, 90 AD3d 988 [2d Dept. 2011]; Citimortgage, Inc. v. Brown, 83 AD3d 644 [2d Dept. 2011).

Accordingly, the plaintiff's motion for a judgment of foreclosure and sale is granted.

Settle Judgment on notice.