Commercial Division Blog

Posted: April 25, 2018 / Categories Commercial, Real Property

Whether Metes and Bounds Description, Street Address or Tax Lot Numbers Determines What Property is Encumbered by Mortgage is a Question of Fact

On April 18, 2018, the Second Department issued a decision in JPMorgan Chase Bank, N.A. v. Zhan Hua Cao, 2018 NY Slip Op. 02603, holding that where the property descriptions in a mortgage were inconsistent, which description was meant to be binding was a question of fact, not law, explaining:

Real Property Law § 240(3) provides that an instrument creating, transferring, assigning or surrendering an estate or interest in real property must be construed according to the intent of the parties, so far as such intent can be gathered from the whole instrument, and is consistent with the rules of law. Where the language used in a mortgage is ambiguous such that it is susceptible of more than one interpretation, the courts will look beyond the written instrument to the surrounding circumstances.

Contrary to the plaintiff's contention, there is no rule that it is the metes and bounds description that determines what property is encumbered by any mortgage and not the street address or tax lot numbers. Rather, where, as here, there is a conflict between the metes and bounds description and the street address and/or tax lot numbers given in the mortgage, there is an ambiguity that requires consideration of parol evidence. Here, the WAMU mortgage was ambiguous on its face, because it referred to one lot, but contained a metes and bounds description for two lots. In support of its motion for summary judgment, the plaintiff failed to submit evidence resolving that ambiguity one way or the other. The affidavit of its expert was based on purported assumed facts that were neither assumed by E.R. nor supported by the evidence. Since the expert affidavit submitted by the plaintiff contained conclusory assertions unsupported by evidentiary facts, and the plaintiff failed to submit any other evidence establishing, prima facie, that the parties to the WAMU mortgage intended it to cover both lots, a triable issue of fact remained regarding that issue.

(Internal quotations and citations omitted).

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