Civil Court of the City of New York, Kings County, February 20, 2020

New York Legal Assistance Group (Kathleen Brennan of counsel) for Candice McClean, respondent.

Karen Blair, respondent pro se.

Stern & Stern (Lawrence Stern of counsel) for petitioner.

Petitioner commenced this holdover proceeding on July 1, 2019, after serving respondents with a 10 day notice to quit after foreclosure pursuant to RPAPL 713 (5). Attached to the 10 day notice is a referee's deed dated May 2, 2019, which transferred title to the property to Labob Krunfol and Daniel Badalov who transferred title to petitioner on the same day. Respondent, Karen Blair, appeared pro se and interposed an answer asserting, inter alia, that she was not properly served after the foreclosure, and no one by the name of John Blair resides in the apartment.

Respondent, Candice McClean, also appeared by counsel, and subsequently moved for an order granting leave to intervene and be named as a respondent and to file a late answer. The resolution court denied Ms. McClean's motion, deemed her answer a general denial and transferred the case to the Trial Part.

After a conference in the Trial Part, the parties agreed to submit memoranda on the issue of whether petitioner was required to serve respondent, Candice McClean, who was not in occupancy at the time the foreclosure action was commenced, with a 90 day notice pursuant to RPAPL 1305.

Petitioner avers that the subject property was sold at a foreclosure auction pursuant to a judgment of foreclosure and sale in the matter of Nationstar Mtge. LLC v Karen Blair, index No. 22150/09. After petitioner took possession of the property, petitioner entered into an agreement with Karen Blair, the former owner, who gave possession of the third floor apartment to petitioner, and informed petitioner that she occupied the first and second floors, but allowed her son to occupy one of the floors. Petitioner then commenced the instant proceeding seeking possession of the first floor of the subject building, and a holdover proceeding seeking possession of the second floor. Petitioner entered into a stipulation of settlement with Karen Blair in the holdover proceeding for possession of the second{**67 Misc 3d at 405} floor. Petitioner states that Karen [*2]Blair also signed an affidavit stating that the occupant of the first floor was not a tenant and did not exclusively occupy that unit. Petitioner contends that after learning of Ms. Blair's affidavit, respondent, Candice McClean, withdrew her motion to dismiss the proceeding based on petitioner's failure to serve her with a 90 day notice. However, upon learning that Ms. Blair was challenging her own affidavit, respondent McClean reasserted her claim.

Petitioner argues that under RPAPL 1305 (2), after foreclosure, only a tenant of a unit not subject to rent regulation is entitled to a 90 day notice, and RPAPL 1305 (1) defines a tenant as someone who appears as a lessee on a lease, and who would have been entitled to a notice pursuant to RPAPL 1303 (4). Under RPAPL 1303 (4), a foreclosing party is required to serve a notice to tenants within 10 days of service of the summons and complaint in the foreclosure action. Petitioner contends that respondent, Candice McClean, who was not in possession in 2009 when the foreclosure action was commenced, is therefore not entitled to a 90 day notice pursuant to RPAPL 1305.

Respondent asserts that Protecting Tenants at Foreclosure Act of 2009 (PTFA) § 702 (Pub L 111-22, Div A, § 1, tit VII, 123 US Stat 1660 [111th Cong, 1st Sess, May 20, 2009]) requires that petitioner serve a 90 day notice to vacate, and as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub L 111-203, 124 US Stat 1376 [111th Cong, 2d Sess, July 21, 2010]) Congress amended the PTFA and clarified that the date of the notice of foreclosure is the date on which title is transferred to a successor entity. The referee transferred title to the subject property on May 2, 2019, and respondent contends that Ms. McClean, who was in possession on that date, should have been served with a 90 day notice.

Further, respondent argues that notwithstanding RPAPL 1305, which requires service of a 90 day notice on tenants who were in possession at the time the foreclosure action was commenced, the PTFA applies unless as outlined in Howlett v Rose (496 US 356 [1990]), petitioner proffers a valid excuse that would deny respondent her right under federal law. Litigants may invoke the protections of PTFA by showing a federal nexus between the loan and the property that is the subject of the foreclosure action. Respondent states that the former owner's mortgagor was MERS, and on August 18, 2009, MERS assigned the loan to Fannie Mae which held the mortgage until August{**67 Misc 3d at 406} 30, 2011. The request for judicial intervention in the foreclosure action was filed on July 28, 2010. Therefore, respondent argues that Fannie Mae held the mortgage when the foreclosure action was commenced, and under 12 USC § 2602 (1), the former owner's mortgage qualifies as a federally related mortgage loan.

Petitioner correctly interprets RPAPL 1305 as requiring a 90 day notice only for tenants in occupancy at the time the foreclosure action was commenced. It is undisputed that respondent McClean was not in possession at the commencement of the foreclosure action, and pursuant to RPAPL 713 (5), petitioner served respondent with a 10 day notice to vacate. However, the 10 day notice provision under RPAPL 713 conflicts with the notice requirements for tenants under the PTFA which affords tenants in possession at the time of transfer of title the right to receive a 90 day notice to vacate (see In re Valle, 2011 WL 722388, 2011 Bankr LEXIS 679 [SD Cal, Feb. 16, 2011, No. 10-15196-LT7]).

Therefore, under these circumstances, the PTFA, which protects tenants in foreclosed properties against abrupt evictions (Bank of Am., N.A. v Owens, 28 Misc 3d 328 [2010]), provides greater protections for tenants than the protection available under RPAPL 1305. PTFA § 702 (a) (2) (B) does not preempt state law that provides greater protections for tenants. However, "it does preempt state law that is less protective of tenants" (Mik v Federal Home Loan Mtge. Corp., 743 F3d 149, 164 [6th Cir 2014]; GMAC Mtge., LLC v Taylor, 27 Misc 3d 550 [2010]). Therefore, a tenant in possession at the time of transfer of title would be [*3]entitled to a 90 day notice to vacate under the PTFA.

The PTFA may be invoked as a defense in a proceeding seeking possession (Mik v Federal Home Loan Mtge. Corp., 743 F3d 149 [6th Cir 2014]). Under PTFA § 702, the successor in interest who assumes title pursuant to a foreclosure on a federally related mortgage loan assumes such interest subject to rights of a bona fide tenant to receive a 90 day notice to vacate or the right to occupy the premises until the remaining term of the lease. In addition, if the tenant has a lease and the successor in interest will occupy the property as a primary residence, the tenant must be given a 90 day notice to vacate.

Respondent McClean seeks dismissal of this proceeding based on petitioner's failure to serve a 90 day notice to vacate. The PTFA requirements of a bona fide tenancy and a federally{**67 Misc 3d at 407} related mortgage must be met for respondent to invoke the protection afforded under the PTFA. Accordingly, this matter is set down for a hearing on April 6, 2020, at 9:30 a.m. to determine if respondent is entitled to a 90 day notice under the PTFA.