housing
Homeowners could recover legal fees in more property fights
The New York bill expands a fee-shifting rule beyond foreclosure cases and adds borrowers, guarantors and transferees to the list of people who can seek costs back.
New York would widen a 2010 rule so more people on the borrower side can recover legal fees in disputes over covered real-property instruments. It also extends the protection to mixed-use buildings and blocks advance waivers.
- Borrowers would get a matching right to recover legal fees.
- The rule would reach more kinds of property disputes, not just foreclosure cases.
- Guarantors, transferees and servicers would be folded into the definition.
- Mixed-use buildings would fall inside the covered property definition.
- In New York, the cost of fighting a lender could matter a lot less if this bill becomes law
In New York, the cost of fighting a lender could matter a lot less if this bill becomes law. It rewrites Real Property Law Section 282, a rule added in 2010, so the fee-shifting protection would reach disputes tied to certain real-property instruments, not just the old foreclosure lane.
The basic idea stays familiar: if a contract already lets the lender recover attorneys’ fees, costs, disbursements or other expenses when the borrower misses a covenant, the borrower would get a matching right back when the lender fails to perform, loses the case, or is otherwise beaten in a covered action. The bill also says that protection could not be signed away in advance.
A matching right on the other side
The change is not just about who wins a lawsuit. It also broadens who counts. “Borrower” would include mortgagors, obligors, debtors, guarantors, owners and transferees tied to the covered instrument. “Lender” would include lenders, mortgagees, note holders, creditors, assignees and servicers.
The property side grows too. Covered residential real property would no longer be limited to the older one-to-four family, condo and co-op language. Under the bill, it would include any New York building or structure used, in whole or in part, as a home, including mixed residential-commercial property. It is a small legal rewrite with a practical punch: legal bills in a property fight do not always stop at the same place as the original dispute.