Opinion
Index No. 802179/2022E
09-13-2024
The Parkchester South Condominium Inc., on behalf of the unit owners of the Parkchester South Condominium, Plaintiff(s), v. John Phelan, et al., Defendant(s).
Unpublished Opinion
Hon. Ashlee Crawford, A.J.S.C.
Notice of Motion (Seq. No. 003) - Exhibits and Affidavits Annexed NYSCEF No(s). 55
Notice of Motion (Seq. No. 004) - Exhibits and Affidavits Annexed NYSCEF No(s). 56
Opposition - Affidavit and Exhibits (Seq. No. 004) NYSCEF No(s). 58
Reply - Affidavit and Exhibits (Seq. No. 004) NYSCEF No(s). 59-60
Upon the foregoing papers, and due deliberation being held, the Court finds as follows:
This action was brought to foreclose a condominium common charge lien against the premises located at 1491 West Avenue, Apt. 3G, Bronx, New York (Block: 3937, Lot: 3962). At a foreclosure sale held on November 13, 2023, the premises was sold to purchaser Anil Ahmad Ally. The report of sale by referee William Bowman, Esq., dated January 11, 2024, and entered January 17, 2024, reflects a surplus of $134,389.18 (NYSCEF Doc. No. 45).
Under motion sequence number 003, pro se defendant/claimant John Phelan moves pursuant to RPAPL §§ 1362 and 1361 for the distribution of the entirety of the surplus funds to himself, as the owner of the equity of redemption. Under motion sequence number 004, pro se non-party purchaser/claimant Ally moves for an order to confirm the referee's report of sale and for a distribution of $26,000.00 of the surplus funds to himself, and the distribution of the $107,717.24 balance to Phelan. Motion sequence numbers 003 and 004 are consolidated for disposition herein.
Ally bases his claim on a vaguely alleged oral rental agreement between him and Phelan, which he contends was to run from January 2024 through some unspecified future date when Phelan would vacate the premises. Ally also contends that he agreed with Phelan that each would assert a separate claim to the surplus, and that Ally's claim would represent his compensation under the purported rental agreement.
Phelan argues that Ally, as neither a lienholder nor creditor, has no legal right to the surplus funds; and that the distribution of the surplus to Ally would essentially amount to an improper refund or rebate on the purchase price. Phelan maintains that the proper forum for any rental dispute is Housing Court.
"[O]nly those judgments and liens which existed upon the property at the time of the... sale constitute liens against the surplus moneys" (NYCTL 1997-1 Trust v Stell, 184 A.D.3d 9, 14 [2d Dept 2020][internal quotation marks omitted], lv denied 35 N.Y.3d 913 [2020]). "Surplus money from a foreclosure sale is not a general asset of the owner of the equity of redemption, but stands in the place of the property for the purpose of distribution among those having vested interests in or liens on the property" (Maspeth Fed. Sav. and Loan Assn. v O'Connell, 221 A.D.3d 883, 885 [2d Dept 2023][internal quotation marks omitted]). "The rights of the parties are fixed at the time of the foreclosure sale, and the rights of a second lienholder are transferred to any surplus" (id.). Here, Ally had no judgment or lien against the premises at the time of sale and, therefore, is not entitled to recover any portion of the surplus funds. Accordingly, it is hereby
ORDERED that the motion by non-party purchaser Anil Ahmad Ally (seq. no. 004) is GRANTED IN PART only to the extent that the referee's report of sale is confirmed, and the remainder of the motion seeking distribution of a portion of the surplus monies to Ally is DENIED; and it is further
ORDERED that the motion by defendant John Phelan (seq. no. 003) seeking distribution to him of the entirety of the surplus monies is GRANTED; and it is further
ORDERED that, upon being served with a certified copy of this order with notice of entry, the Commissioner of Finance of the City of New York, having possession of the subject surplus funds, is directed to distribute the surplus funds as follows:
FIRST: to the New York City Commissioner of Finance, the usual and customary fees incurred in connection with this surplus money proceeding;
SECOND: to defendant John Phelan, as the owner of the equity of redemption, the remaining balance of said surplus money.
This constitutes the decision and order of the Court.