AMT CADC Venture v. 455 CPW, Supreme Court, New York County Index No. 810109/2011
In this mortgage foreclosure action, the court addressed the issue of what constitutes a “first mortgage” for purposes of Real Property Actions and Proceedings Law 339-z. This statute provides that the condominium will have a priority lien for unpaid common charges that will receive priority over all other liens, irrespective of when filed, with the exception of tax liens, certain government liens and a “first mortgage of record.” The issue in AMT CADC Venture was whether a lien on three residential units and a garage that resulted when the condominium sponsor mortgaged these properties would prime the condominium board’s common charge lien.
The court held the sponsor’s mortgage was a “first mortgage of record” for purposes of Real Property Actions and Proceedings Law 399-z. The court analyzed the statute and determined it did not define “first mortgage of record.” Accordingly, the court reasoned that because “first mortgage of record” was not defined by the statute, it would give effect to the statute’s plain meaning. Finding that nothing in the text of the statute limited the meaning of “first mortgage of record” to mortgages for the purchase of a condominium unit, the court found that the sponsor’s blanket mortgage was a “first mortgage of record” for purposes of Real Property Actions and Proceedings Law 339-z and therefore had priority over the condominium board’s common charge lien.
The lesson of AMT CADC Venture is that a sponsor’s blanket mortgage on a condominium will trump a condominium board’s statutory lien for common charges.