SUPREME COURT- STATE OF NEW YORK
I.AS. PART 34 – SUFFOLK COUNTY

US BANK NATIONAL ASSOCIATION, AS
TRUSTEE, ON BEHALF OF THE HOLDERS
OF THE CSMC TRUST 2006-CF2 CS
MORTGAGE PASS THROUGH
CERTIFICATES, SERIES 2006-CF2,
Plaintiffs,

– against –

KAREN CICCARELLI, T&V CONSTRUCTION
CORP., “John Doe”,
Defendants.
—————————————————————-

EXCERPT:

Here, plaintiff failed to establish the validity of the assignment by submitting evidence showing
that the note was either physically delivered to MERS or assigned to MERS by Mortgagelt (see
Homecomings Fin., LLC v Guldi, 108 AD3d 506). The affidavit of Jason T. Baker, a Document Control
Officer at Select Portfolio Servicing, plaintiff’s servicer, does not give factual details as to the physical
deli very of the note and, thus, is insufficient to establish that plaintiff had physical possession of the note
at any time (see Homecomings Fin., LLC v Guidi, 108 AD3d 506; Deutsche Bank Nat. Trust Co. v
Haller, 100 AD3d 680 [2 Dept 2012]). Moreover, it is not clear whether the endorsement in blank on the
last page of the note by the assistant secretary of Mortgagelt, Inc. was effectuated prior to plaintiffs
substitution in this action (see Deutsche Bank Nat. Trust Co. v Haller, 100 AD3d 680). Thus, plaintiff
failed to establish, prima facie, that it has standing to prosecute this action to foreclose the Ciccarelli
mortgage (see Homecomings Fin., LLC v Guidi, 108 AD3d 506; Bank of New York v Silverberg, 86
AD3d 274 [2d Dept 2011]). Therefore, its request to strike Tubens’ affirmative defense of lack of
standing is denied. Tubens’ submissions in opposition failed to establish as a matter oflaw that plaintiff
lacked standing to commence this action (see HSBC Bank USA v Hernandez, 92 AD3d 843 [2d Dept
2012]). It so follows that his request for summary judgment dismissing the complaint on said basis is
denied.

Tubens submits his affidavit in opposition to the motion and in support of his cross motion
attesting that when he purchased the subject premises at auction he understood that the T & V mortgage
was a first lien and that he would own the premises free of any other liens or mortgages. His basis of
understanding was a “preliminary ‘due diligence’ of the foreclosure” at the time of the auction that
included reviewing the T & V mortgage, notice of sale, terms of sale and judgment of foreclosure and
sale, “none of which gave any indication that the mortgage being foreclosed was in a secondary position
or that the sale would be subject to any senior liens or mortgages.” According to Tubens, “[i]t was only
after the auction that [he] was advised by [his] title company that there was another mortgage on the
premises held by US Bank National Trust … and that it was dated after the mortgage being foreclosed
(although recorded prior to the mortgage being foreclosed) and that there was pending litigation
surrounding the priorities of the two mortgages.” He indicates that he is “a real estate investor of
foreclosed properties for over 10 years,” that it was his practice to rely solely on the language contained
in documents presented at the auction sale, and that he relied on the fact that the T & V mortgage and the
judgment of foreclosure and sale lacked the boilerplate language indicating that it was subject to a prior
lien or mortgage and the T & V mortgage’s recitation that it was a “First Mortgage.” Tubens claims that
Pratti and Rasmussen engaged in several fraudulent transactions prior to the recording of the T & V
mortgage, which included transferring said properties to bona fide purchasers or obtaining new mortgage
loans without satisfying or disclosing the existence of the T & V mortgage. According to Tubens,
Ciccarelli obtained the subject mortgage loan without disclosing to Mortgagelt the existence of the T &
V mortgage

“‘Under New York’s Recording Act (Real Property Law§ 291), a mortgage loses its priority to a
subsequent mortgage where the subsequent mortgagee is a good-faith lender for value, and records its
mortgage first without actual or constructive knowledge of the prior mortgage'” (2 Lisa Ct. Corp. v
Licalzi, 89 AD3d 721 , 722 [2d Dept 2011], quoting Washington Mut. Bank, FA v Peak Health Club,
Inc., 48 AD3d 793, 797 [2d Dept 2008]; see Mortgage Electronic Registration Sys., Inc. v Rambaran, 97
AD3d 802, 803-804 [2d Dept 2012]). “[W]here a purchaser has knowledge of any fact, sufficient to put
him on inquiry as to the existence of some right or title in conflict with that he is about to purchase, he is
presumed either to have made the inquiry, and ascertained the extent of such prior right, or to have been
guilty of a degree of negligence equally fatal to his claim, to be considered as a bona fide purchaser”
(Williamson v Brown, 15 NY 354, 362 [1857]; see Lucas v J & W Realty and Constr. Mgt., Inc., 97
AD3d 642, 643 [2d Dept 201 2]; Maiorano v Garson, 65 AD3d 1300, 1303 [2d Dept 2009]; Ward v
Ward, 52 AD3d 919, 920-921 [3d Dept 2008]). If the purchaser fai ls to use due diligence in examining
the title, he or she is chargeable, as a matter of law, with notice of the facts which a proper inquiry would
have disclosed (see People v Luhrs, 195 NY 377 [1909); Cambridge Valley Bank v Delano, 48 NY 326
[1872]; Astoria Fed. Savings & Loan Assn. v June, 190 AD2d 644 [2d Dept 1993); see also Fairmont
Funding, Ltd. v Stefansky, 301 AD2d 562 [2d Dept 2003]). Similarly, a mortgagee is under a duty to
make an inquiry where it is aware of facts “that would lead a reasonable, prudent lender to make
inquiries of the circumstances of the transaction at issue” (LaSalle Bank Natl. Assn. v Ally, 39 AD3d
597, 600 [2d Dept 2007]; see Lucas v J & W Realty and Constr. Mgt., Inc., 97 AD3d at 643). “A
mortgagee who fails to make such an inquiry is not a bona fide encumbrancer for value” (Booth v
Ameriquest Mtge. Co., 63 AD3d 769, 769 [2d Dept 2009]; see JP Morgan Chase Bank v Munoz, 85
AD3d 1124, 1126 [2d Dept 2011]; Thomas v LaSalle Bank N.A., 79 AD3d 1015, 1017 [2d Dept 2010];
see also Mortgage Electronic Registration Sys., Inc. v Rambaran, 97 AD3d at 804). Further, “[a]n
assignee stands in the shoes of the assignor and takes the assignment subject to any preexisting
liabilities” (Arena Constr. Co. v Sackaris Sons, 282 AD2d 489, 489 [2d Dept 2001]; see TPZ Corp. v
Dabbs, 25 AD3d 787, 789 [2d Dept 2006]; see also Mortgage Electronic Registration Sys., Inc. v
Rambaran, 97 AD3d at 804).

Here, plaintiffs mortgage lien was recorded and indexed at the Suffolk County Clerk’s Office
under District 0100 Section 023.00 Block 04.00 and Lot 072.000 three years prior to the purchase of the
subject property by Tubens, whose deed described the property as District 0100 Section 023 .000 Block
04.00 and Lot 072.000. Contrary to Tubens’ assertions concerning lack of notice of any prior mortgages,
the Judgment of Foreclosure and Sale granted on January 17, 2008 (Sgroi, J.) expressly provided that
“Ordered, Adjudged and Decreed that the premises be sold subject to … (g) Prior mortgages and
judgments, if any, now liens of record;” The notice of sale indicated that the premises would be sold
subject to the provisions of the filed judgment and terms of sale. A review of the Suffolk County
Clerk’s Office records prior to purchase would have revealed the existence of plaintiff’s interest in the
subject property. Unfortunately, Tubens had a title search performed after he purchased the subject
property at auction. Thus, Tubens had constructive notice of plaintiff’s mortgage lien and was
chargeable with the duty to make further inquiry to determine whether the lien had been satisfied or
released (see Andy Assoc. v Bankers Trust Co., 49 NY2d 13; see also Real Property Law§ 291;
Congregation Beth Medrosh of Monsey, Inc. v Rolling Acres Chestnut Ridge, LLC, 101 AD3d 797 [2d
Dept 2012]). Under the circumstances, Tubens cannot claim to be a bona fide purchaser for value
without notice of plaintiff’s prior encumbrance and, therefore, is not entitled to the protection of the
recording statutes (see Real Property Law§ 291; Fairmont Funding, Ltd. v Stefansky, 301 AD2d 562;
see also HSBC Mtge. Services, Inc. v Alphonso, 58 AD3d 598 [2d Dept 2009]).

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