How Do I Stop Foreclosure on a Business in New York?

Full question:

Need to know what documents i need to 1) stop and cease a business foreclose 2) papers needed to submitted a law suit to local courts.

• Category: Real Property
• Subcategory: Foreclosure
• Date: 04/07/2025
• State: New York

Answer:

In foreclosure lawsuits, the debtor typically asks the court for three things, in the following order:

-a temporary restraining order (which lasts for a certain number of days, typically under 2 weeks)

-a preliminary injunction (will last until the court decides the case), and

-a permanent injunction (which will be granted if you win your case).

Lack of funds and inability to pay is not considered a valid defense. A valid defense may include such excuses as identifying the incorrect borrowing party to the loan contract, or having made all payments on time, among others. The answer is an opportunity to show why the property shouldn't be foreclosed upon.

The filing of any bankruptcy action automatically stays a foreclosure proceeding, regardless of type. At that point, whether the stay will be lifted depends on whether the mortgagor has equity in the mortgaged property. If the bankruptcy has been filed under a Chapter 11 petition, the bankruptcy court may "terminate, annul, modify or condition such stay" for cause, including the lack of adequate protection of an interest in property of the mortgage holder, or if the mortgagor does not have equity in the property and the property is not necessary for an effective reorganization.

During the past decade, mortgages were sold and resold, bundled into securities and sold to investors. It is usually legal for a lender to assign a borrower's contract to another as long as the terms of the contract don't prohibit the assignment. However, it is common for mortgages to be sold or assigned to another company, and the borrower is not relieved of obligations for payments. etc. by the assignment.

In many cases, the original note signed by the homeowner was lost, stored away in a distant warehouse or destroyed. Persuading a judge to compel production of hard-to-find or nonexistent documents can, at the very least, delay foreclosure, buying the homeowner some time and increasing the pressure on the lender to renegotiate the mortgage. The original note is almost always electronically retained and can eventually be found.

Judges are often willing to accept electronic documentation. Lenders are sometimes allowed to produce other paperwork to establish they are the holder of a loan. There have been cases where the foreclosure action was thrown out because of a failure to produce the note, but it will be a matter of subjective determination for the court to decide if the foreclosure may proceed.

A complaint is a general statement of the claim of the plaintiff. The complaint must describe the actions that led to the claim of a violation (i.e., violation of rights). The claim can be for money damages. It could also be a claim for equitable remedies like specific performance (e.g., court forcing a party to abide by a contract) or an injunction (e.g., stopping a person from doing something). The complaint must establish jurisdiction of the court in which it is filed. For example, if the complain is filed in federal court, it must show diversity of citizenship or that a federal statutory or constitutional question is involved.

Next you must serve process on the defendant. This involves attaching a copy of the complaint to a summons which is served on the defendant. The summons explains to the defendant that he is being sued; the name of the court in which he is being sued; when he must file an answer; and that a default judgment will be entered if no answer is filed. The summons must normally be served on the individual defendant. Some states allow service on a member of defendant's household if the defendant is not available. A plaintiff must serve a corporate defendant by serving the registered agent or an appropriate officer of the corporation. If you cannot locate the defendant, some states allow service of process by filing a notice in a newspaper. Unless the defendant is served with process, no judgment can be taken against him.

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