Tag Archives: negotiable instruments

“Deed in a Box”

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I was happy to present on a recent “Deed in a Box” case (more on that below) at the American College of Mortgage Attorneys annual meeting on the Professors’ Panel along with

  • Steven W. Bender, Associate Dean for Planning and Strategic Initiatives and Professor of Law; Co-Faculty Director of Critical Justice Initiative, Seattle University School of Law, Seattle, WA
  • R. Wilson Freyermuth, Robert L. Hawkins/Dale A. Whitman Chair Emeritus, Curators Teaching Professor Emeritus, University of Missouri School of Law; Executive Director, Joint Editorial Board of Uniform Real Property Acts, Columbia, MO
  • Julia P. Forrester Rogers, Provost Faculty Research Fellow and Professor of Law, SMU Dedman School of Law, Dallas, TX

Professor Bender explained that Vargas v. RRA CP Opportunity Trust 1 (Wash. 2026), now under reconsideration, could limit nonjudicial foreclosure to holders of negotiable instruments, which would push lenders on HELOCs and most commercial loans toward receiverships and mezzanine structures and expose similar “holder” statutes in other states.

Professor Freyermuth provided an update on the Restatement (Fourth) of Property (for which he is an Associate Reporter). The Restatement 4th will, for the first time, address when a long delay in a foreclosure operates to time-bar the right to foreclose.

Professor Forrester Rogers previewed the Uniform Law Commission’s draft Deed Fraud Act (for which she is the Reporter), which pairs prevention tools (owner notification, title freezes, a known-filer program, and notarial verification) with an expedited court proceeding to void fraudulent deeds and mortgages.

Deed in a Box

My presentation focused on Shanghai Commercial Bank Ltd., New York Branch v. New Tent, LLC, No. 850240/2024 (Sup. Ct. N.Y. Cnty. June 13, 2026), in which Justice Masley of the Commercial Division held that a deed in lieu of foreclosure delivered as consideration for a forbearance agreement is a mortgage under Real Property Law § 320. The decision appears to be the first in New York to hold this expressly in the forbearance context.

The facts will be familiar to anyone who has worked out a troubled loan. The lenders had made about $75 million in loans secured by a mortgage on 335 West 35th Street in Manhattan. After the borrowers defaulted, the parties signed a forbearance agreement. In exchange for the forbearance, the borrowers delivered a conveyance in lieu of foreclosure that would take effect if the loan was not repaid by the end of the forbearance period. The agreement said the conveyance was absolute “in fact as well as in form” and was not intended as a mortgage or security instrument. The borrowers did not pay and then refused to cooperate with recording, so the lenders sued.

The court’s reasoning follows a long line of New York cases, including Basile, Leonia Bank, Patmos, and RTT Holdings. Those cases hold that a deed given to secure a debt creates only a mortgage, however it is labeled. Here the conveyance was given in exchange for forbearance on an existing, defaulted obligation, so it functioned as security for the debt, and the disclaimer could not change that.

The practical lesson is that a deed in lieu is not a shortcut around a NY foreclosure in a forbearance deal. Lenders who want speed should consider other tools, although they have their own limitations: a consent judgment of foreclosure, an accommodation pledge of the borrower’s equity interests that can be enforced through a UCC sale, or an assignment in lieu of the membership interests. The lenders have appealed to the First Department, so there may be further developments regarding the “deed in a box” in New York.

Connecticut Court Denies All Five of Defendant’s Special Defenses to Foreclosure Action

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The court in deciding Bank of Am., N.A. v. Samaha, 2013 Conn. Super. (Conn. Super. Ct., 2013) granted the plaintiff’s motion for summary judgment.

In this action, the plaintiff sought to foreclose a mortgage executed by Joseph Samaha and Denise Samaha in favor of the Webster Bank.

The defendant raised several special defenses to this foreclosure action. First, the defendant asserted that the plaintiff did not have standing to bring this litigation. Second, defendant claimed that as a result of the death of one of the makers of the note, Joseph Samaha, that his estate had an indivisible interest in the subject property and was subject to probate court jurisdiction. Third, the defendant challenged the authority of MERS to assign this mortgage to the plaintiff. Fourth, the defendant alleged that she had tendered payment with regard to the note and she alleged accord and satisfaction. Fifth, the defendant challenged whether or not the note in question was a negotiable instrument.

With regard to the first special defense, the court found that the affidavits supplied by the plaintiff established that they had standing for the purposes of doing this litigation.

In regards to the second defense, the court found that there was simply no authority for this assertion. The third special defense challenged the authority of the MERS to assign the note and mortgage. The court found that there were no facts alleged in the special defense and there was no affidavit from the defendant providing any factual foundation for her assertions.

The court found that the fourth defense was a mere assertion, without any evidence to support it, and thereby contest or create a material issue of fact for a motion of summary judgment is insufficient. Finally, the fifth special defense was deemed to be an assertion of a legal conclusion.

Connecticut Court Rejects Invalid Assignment and Standing Claims

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The court in deciding Bank of Am., N.A. v. Samaha, 2013 Conn. Super.  (Conn. Super. Ct., 2013) granted summary judgment in favor of the plaintiff.

Plaintiff sought to foreclose a mortgage executed by Joseph Samaha and Denise Samaha in favor of the Webster Bank in the principal amount of $162,000.00.

The defendant raised several special defenses to this foreclosure action. First, the defendant asserted that the plaintiff did not have standing to bring this litigation. Second, the defendant claimed that as a result of the death of one of the makers of the note, Joseph Samaha, that his estate had an indivisible interest in the subject property and was subject to probate court jurisdiction. Third, the defendant challenged the authority of MERS to assign this mortgage to the plaintiff. Four, that the defendant had tendered payment with regard to the note and she alleged accord and satisfaction. Fifth, the defendant challenged whether or not the note in question was a negotiable instrument.

Regarding the first special defense, the court decided that the plaintiff had standing.
The court found there was simply no authority for the defendant’s second assertion. Further, the court found there were no facts alleged in the special defense and there is no affidavit from the defendant providing any factual foundation for the third assertion. Regarding the fourth special defense the court found that the mere assertion of this defense, without any evidence to support it, and thereby contest or create a material issue of fact for a motion of summary judgment is insufficient. Lastly, the fifth special defense was deemed to be an assertion of a legal conclusion.

The court in deciding this case granted the plaintiff’s motion for summary judgment.

Borden and Reiss on Lawyers and REMICs

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Our latest, Dirt Lawyers and Dirty REMICs, is on SSRN and BEPress.