(3 minutes to read) Today, I’d like to talk about the New York Consolidated Laws, Civil Practice Law, and Rules — CVP § 6515 subsection (2), which concerns the cancellation of a Notice of Pendency where both the plaintiff and the defendant are required to post security.
A Notice of Pendency is filed against a property, which prevents the sale or transfer of the property or refinance of the mortgage. The Notice of Pendency also violates most mortgage agreements. In order to get a clear title, the property owner would have to motion the court for them to cancel the Notice of Pendency, and courts have required bonds to be posted to secure the amount claimed against the real property. They can also require both the plaintiff and the defendant, where the plaintiff will be the property owner who would be required to post the bond to guarantee the amount claimed, and the defendant could post a bond to continue their claim against the real property.
This bond is to guarantee the future payment if there is ultimately a judgment against the property owner. And the bond acts as generally a guarantee of a future judgment or guarantee of a future claim. The surety looks to the client’s financial wherewithal to underwrite the matter, so the client would have to provide either a financial statement or deposit collateral with the surety.
The bond is pursuant to a court order, so the court, at their discretion, can set an amount, less than the amount claimed or greater than the amount of claim. It is up to a judge to determine, first, whether or not an undertaking is required, and secondly if it is, how much of an undertaking should be required to secure the party that’s making the claim.
What you should do to prepare for the eventual court proceedings is to try to have your client pre-approved for a certain amount of the claim before you go into court. One of the reasons for that is if your client is unable to post the bond or undertaking, you may not want to spend the money motioning the court if they cannot obtain the guarantee.
Another reason is that if you’re prepared to post the bond — once the bond is ordered, or the undertakings ordered — you can move forward immediately. The surety would require that the client provide a financial statement for them to underwrite, a copy of the complaint or the Notice of Pendency, as well as a calculation of how much is being claimed by the per-party filing the notice pendency.
A pendency is like a claim to real property. Two people are in a dispute, and claiming that they are owed something for the real property to stop the sale or encumbrance of it. Someone in a contractual dispute with a real estate owner could file a Notice of Pendency to make sure that they have a security interest in the property — so that if they are awarded the money, they can actually collect on it.
PEDERSEN & SONS SURETY BOND AGENCY, INC.
15 Maiden Lane Suite #800
New York, NY 10038
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