Valley National Bank brought a foreclosure lawsuit with regard to a synagogue in Brooklyn. In 2008, the synagogue borrowed $500,000 from State Bank of Long Island. This bank thereafter merged with Valley National Bank. The congregation of the synagogue alleged that the synagogue had two functions. It was a place of prayer and it was the principal residence of the rabbi and his family. They claim “this dual property function had existed since 1970 when the present rabbi’s grandfather established a congregation at its present location.

In such Hasidic Sects, the Shtiebel is the rabbi’s home and his presence is the essence of the Shtiebel.” The congregation alleged in their papers when the mortgage was taken out, the bank was made aware Rabbi Teitelbaum’s residence was located on the site of the synagogue.

A Residential Foreclosure?

The congregation argued that the foreclosure was therefore a residential foreclosure. It should therefore have been in a residential foreclosure part and not in a commercial foreclosure courtroom. As a residential foreclosure, Rabbi Teitelbaum was entitled to notice pursuant to New York Real Property Actions and Proceedings Laws concerning the residential foreclosure.

Bank Argues Rabbi Teitelbaum Has No Standing

The foreclosing bank’s position was that Rabbi Teitelbaum was not a necessary party to the foreclosure lawsuit. They claimed it was a commercial loan and he was not a signatory on the loan. The bank’s attorneys stated in their papers, “instead of presenting a modified defense to [Valley National Bank’s] claims, borrower obfuscates by mischaracterizing the facts in attempts to divert attention from its acknowledged commercial loan default by repeatedly alleging that the rabbi and his family actually reside in the synagogue that is the mortgaged commercial premises.”

Judge Holds Property is Not Residential

The judge on the case rendered a decision that the property at issue was a religious structure and not residential property. The judge went further on to hold Rabbi Teitelbaum was not an indispensable party to the lawsuit. Judge Carolyn Demarest rejected the argument submitted by Teitelbaum. She held that even though he lived on the premises, he was not a signatory to the loans, promissory note, or the mortgage. He therefore was not an indispensable party to the lawsuit.

When Judge Demarest was presented with a similar case where the Appellate Division, Second Department made a different ruling, she stated, “in this action, defendant does not establish that Teitelbaum has a lease to the property and even it Teitelbaum does have a lease he may not be dispossessed by a purchaser at a foreclosure sale absent further proceedings.” With this, she was referring to the fact in the event the bank took title to the property they would still have to bring an eviction proceeding to get Rabbi Teitelbaum, his wife and eight children, off the property.

Conclusion

This is a very close call made by Judge Demarest. I would suggest Rabbi Teitelbaum appeal this decision to the Appellate Division of the Second Department. He may be able to persuade them that he should be named as a party because he was a tenant, even without a lease. Month to month tenants are still tenants and they should be named in all foreclosure lawsuits as interested parties.

Elliot Schlissel is a foreclosure attorney representing individuals and families in residential or commercial foreclosure lawsuits throughout the Metropolitan New York area. Elliot and his staff of dedicated lawyers have an excellent success rate in keeping families in their homes and stopping foreclosure lawsuits in their tracks.