The executrix, the decedent's sister, commenced this proceeding pursuant to SCPA Article 19 for an order allowing her to sell mortgaged real property allegedly belonging to the estate so that she may reimburse herself and one distributee for various estate administration and other expenses. On the return date of process there was no appearance in opposition. However, one of the respondents, the former lender and mortgagee of the property, Impac Funding Corporation d/b/a Impac Lending Group (Impac), moves for an order excusing and vacating its default in answering and granting it leave to file late objections. Upon the grant of such leave, Impac also seeks summary judgment dismissing the petition interposed against it asserting, inter alia, that it is not the real party in interest.

The decedent died on November 22, 2004. Her will, which was admitted to probate by a decree entered December 23, 2005, specifically devises certain real property in the Bronx to her three children, in equal shares as joint tenants with the right of survivorship. The executrix alleges that sometime after the decedent's death, but prior to the issuance of letters testamentary, two of the three children recorded a deed to themselves of the real property which previously was held in the decedent's name alone, and then reconveyed that realty so it was held solely in the name of one daughter, enabling her to borrow against and mortgage the realty. Thereafter, the executrix commenced an action in the Supreme Court, Bronx County (Index No. 20710/2006) seeking, inter alia, to void the deed and cancel the mortgage, and she then commenced this proceeding based upon an executor's deed she filed with the Bronx Registrar of Deeds and Office of the City Register.

The mortgage recites that Impac is the lender and, for purposes of recording the mortgage, [*2]Mortgage Electronic Registration Systems, Inc. (MERS) is the "mortgagee of record" and is acting as "nominee for Lender and Lender's successors and assigns." The executrix contends, inter alia, that the mortgage is invalid because the daughter who gave it and obtained the loan from Impac did not have full title to the property. In addition to the three children and Impac, process was served on a title insurance company and MERS. After defaulting on the initial return date of process, Impac served and filed its instant motion seeking to excuse that default and related relief, including summary judgment dismissing the petition against it. In support of its contention that it is not the real party in interest, Impac annexes various documents to establish that it sold the loan to another entity. Impac also objects to the sale of the realty on various grounds.

The uncontroverted facts set forth in the petition are that the estate has unpaid administration expenses and that, without the sale of the real property, the decedent did not own sufficient assets to pay for the administration expenses. Consequently, the application may be granted at this time to the limited extent of authorizing the petitioner to sell the real property free of the interests of the devisees under the decedent's will (SCPA 1902[1]). However, the issue of whether the deed from one of the devisees to the other and the subsequent mortgage on the property can be voided or, instead, results in a conveyance or encumbrance limited to the grantor's or mortgagor's interest in the real property (see V.R.W., Inc. v Klein, 68 NY2d 560 [1986]; Real Property Law § 240-c), are the same issues that have been raised in the pending supreme court action which was commenced prior to this proceeding. Moreover, since letters testamentary issued to the petitioner on December 23, 2005 and the instant petition was not filed until June 28, 2007, more than 18 months from the date when letters testamentary were issued, the rights under any mortgage acquired prior to the date that this proceeding was commenced cannot be affected by a sale pursuant to Article 19 of the SCPA (SCPA 1903[1]).

Impac's application for leave to file late objections, alleging, inter alia, that this proceeding should be dismissed against it on the ground that it is not the real party in interest due to its assignment of its interest in the mortgage, is rendered academic by the court's holding herein that the rights of the present mortgage holder, whoever that might be, are not affected by the authorization granted to the fiduciary to sell the property free of the devisees' interests. Consequently, the court will neither pass upon nor comment about the issues raised in Impac's application.

The court realizes that the limited relief granted herein is of little or no practical value to the petitioner because it is unlikely that anyone will purchase the property without resolving the rights of the mortgagee. The court also notes that it does not appear that any of the interested parties desire to reside at the real property, and that, whenever the property is ultimately sold, the mortgagee will not be entitled to a greater interest in the sale proceeds than that of the mortgagor. Moreover, it does not appear that any of the parties would profit from delaying the sale until the conclusion of the pending supreme court action, a newly commenced partition or other action, because it would not be surprising if unpaid taxes or other liens and expenses mount during this period. Therefore, it would appear to be in the best interests of all of the parties to expeditiously sell the real property free of the mortgage and to hold the proceeds in escrow pending a determination of the interests of the respective parties.

This constitutes the decision and order of the court.

SURROGATE