Appellate Division, Second Department, Brooklyn. A recent ruling gives property owners the right to intervene in foreclosure proceedings involving tenants’ disputed leases. Brooklyn Eagle Photo by Rob Abruzzese
The Appellate Division of the Second Department reverses a Kings County Supreme Court ruling allowing Brooklyn commercial property owner BLDG Oceanside, LLC to intervene in a foreclosure action involving its tenant 980 Atlantic Holdings, LLC The court ruled that it should be done. .
Although the lower court denied BLDG’s motion to intervene, the Appellate Division found that BLDG had a substantial stake in the case because it claimed to have terminated the lease, thereby allowing the tenant’s leasehold lien to be waived. It was determined that it would be unenforceable.
The case centers on a foreclosure action initiated by Atlantic Avenue Capital, LLC, which acquired a leasehold lien on the leasehold interest in the BLDG property at 980 Atlantic. When 980 Atlantic allegedly defaulted on payments, Atlantic Avenue filed for foreclosure on the mortgage. BLDG sought to intervene in the lawsuit alleging that the lease was terminated for non-payment of rent and other fees and that the rights to Atlantic Avenue’s mortgage no longer existed.
The Appellate Division held that BLDG had the right to intervene under New York law because the outcome of the foreclosure action could adversely affect its property rights. The court determined that allowing the BLDG to participate would promote judicial economy by addressing the validity of lease terminations and mortgage foreclosures in a single proceeding. The case will now return to Kings County Supreme Court for further consideration of BLDG’s arguments to dismiss the foreclosure motion or file an answer.
~ Atlantic Avenue Capital LLC vs. 980 Atlantic Holdings LLC ~
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