Summary
The Appellate Division, First Department reversed a trial court order denying a plaintiff mortgagee's motion to appoint a receiver over a foreclosed property. The court held that Real Property Law § 254(10) mandates the appointment of a receiver upon a default if the mortgage contract authorizes it, eliminating the requirement for the mortgagee to demonstrate a risk of irreparable harm. Because the plaintiff provided sworn proof of default and there was no indication the foreclosure was improperly commenced, the lower court exceeded its discretion.
Topics
Practice areas
Questions Presented
- Whether the trial court erred in requiring the mortgagee to demonstrate danger of irreparable loss beyond the statutory requirement of Real Property Law §254(10) to appoint a receiver.
Holdings
- The appellate court held that Real Property Law §254(10) requires appointment of a receiver upon default when the mortgage contains a receiver clause, and no additional showing of danger is required; therefore the trial court erred and the motion to appoint a receiver is granted.
Key quotations
“Real Property Law § 254 (10) requires the appointment of a receiver in the event of any default, so long as the mortgage documents contain language in which the parties agree to the appointment.” (at 1)
“There is no requirement "that plaintiff demonstrate more than what is required by Real Property Law § 254 (10)".” (at 1)
Factual background
The plaintiff, a mortgagee, sought appointment of a receiver for a foreclosed property after the mortgage went into default. The mortgage contained a clause granting the mortgagee the right to a receiver upon default. The trial court denied the motion, claiming the plaintiff had not shown the premises were in danger of irreparable loss.
Procedural history
The Supreme Court, Bronx County denied plaintiff's motion to appoint a receiver; the Appellate Division reversed that denial.
Remand instructions
Order the Supreme Court, Bronx County to appoint a receiver as provided for in the mortgage and Real Property Law §254(10).