Mortgagee Fined for Violations

Facts: Mortgagee bank foreclosed on landlord's building in December 1992. Mortgagee sold the building in May 1995, 29 months later. During that 29 months, mortgagee didn't advise tenants of anything, including where to send rent and where to call for repairs or services. Mortgagee didn't file a new multiple dwelling registration certificate with HPD and didn't inform fuel or utility suppliers where to send bills. Mortgagee did pay property taxes. In October 1994 the gas company removed the building's gas meter for nonpayment; the building was therefore left without heat or hot water. HPD sued mortgagee and former landlord for building violations. Landlord didn't appear, and mortgagee claimed it had no duty to correct building violations. Court: Mortgagee loses. Mortgagee held on to the building for an extended period before sale without demanding rent or seeking the appointment of a receiver. Mortgagee was the only one in operation and control of the building for 29 months. Upon landlord's default, mortgagee should have acted not only to safeguard its financial investment but to protect the lives and safety of building tenants. Mortgagee had a duty to inspect and secure the building, to provide essential services, and to collect rent.

HPD v. Greenpoint Savings Bank: NYLJ, p. 29, col. 2 (3/13/96) (Civ. Ct. Queens; George, J)