Incompetancy May Not Prevent the Transfer of a Deed In A Foreclosure

Article 81 of the Mental Hygiene Law provides for the appointment of a Guardian for the personal needs and property management of a person who is found to be incapacitated. Guardianship proceedings are typically commenced by close relatives and friends who desire to protect the interests of a person who is at risk and cannot adequately handle their own affairs.

The personal and property interests of incapacitated persons are varied and concern such issues as the payment of debts and obligations and securing assets such as homes and other real property through property management and even Court proceedings. Recently, the Supreme Court in Richmond County was required to decide a case where a person for whom the Court had appointed a Temporary Guardian had lost her home through a foreclosure.

The case of U.S. Bank, N.A. v. Bernhardt, 28 Misc3d (1234(A), (August 10, 2010),
was decided by the Honorable Anthony Giacobbe. Initially, the Court-appointed Temporary Guardian asked the Court to vacate the default judgment of foreclosure on the grounds that the alleged incapacitated person was not properly served with the Summons and Complaint. Following a hearing the Court determined that service was not proper and vacated the default judgment of foreclosure.

However, since the property had already been sold to a third party at the foreclosure sale, the Court was next faced with the issue as to whether the Court should allow title to the property to remain in the new owner or should revert back to the alleged incapacitated person. After weighing many factors including: (i) the good faith of the purchaser; (ii) that neither the bank nor the purchaser was aware of the homeowner’s alleged incapacity; (iii) the lack of evidence that the homeowner was incapacitated when the foreclosure action occurred; and (iv) that the homeowner was in default under the mortgage and failed to demonstrate any ability to pay the mortgage arrears, the Court decided that it would not set aside the foreclosure sale. It, therefore, allowed the purchaser who obtained title through the foreclosure sale to remain as the owner of the property.

The Bernhardt case is a striking example of unfortunate consequences that may occur where a person is possibly unable to handle or safeguard their affairs and legal proceedings or other conditions result in harm or damage to their property or personal interests. It is important to consider the benefits of a New York Guardianship Proceeding and consult with an attorney experienced in these matters.

New York Guardianship Attorney Jules Martin Haas, Esq. has been representing clients in Guardianship and Trusts and Estates matters throughout the past 30 years. If you or someone you know is involved with or has questions about a New York Guardianship or estate, please contact me at (212) 355-2575 or email:, for an initial consultation.

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