First New York Bank for Business v. 155 E. 34 Realty Co

In First New York Bank for Business v. 155 E. 34 Realty Co., 158 Misc. 2d 658, 601 N.Y.S.2d 990 (Sup. Ct. NY County 1993), the receiver, appointed in a foreclosure action at the bank's request under RPAPL 1325 (2) to pay taxes, assessments, water charges, and other premises charges of a delinquent garage condominium unit, was also directed to pay the common charges to the condominium board, finding that they were part of the expenses of maintaining the premises. RPAPL 1325 addresses appointment of a receiver in a foreclosure action. Subsection (2) concerns the ability of the court to direct the receiver of rent to apply rental payments to the payment of accrued interest on the mortgage, where the plaintiff has established entitlement to such, as described in the statute. The condominium board successfully argued that paying the monthly common charges as rent would be consistent with the receiver's obligation to preserve the premises under RPAPL 1325 (2), while the bank unsuccessfully argued that the common charges constituted a lien which was junior to its first mortgage and should not be paid by the receiver. First New York Bank relied in part on the unpublished opinion Board of Mgrs. v. Chelsea Realty Assocs., NYLJ Aug. 5, 1995, at 22, col.5 (Sup Ct., NY County), which directed the receiver to pay monthly common charges for the liened premises because they were necessary to operate the premises and could be considered to be an expenditure incurred for the preservation and maintenance of the premises during the pendency of the receivership. (First New York Bank, 158 Misc. 2d at 661).