Basile v. Erhal Holding Corp

Brief Fact Summary. Erhal Holding Corp., (Defendant), moves for a declaration that Ms. Basile, (Plaintiff), waived her right of redemption when she executed a mortgage and deed to Defendant in lieu of foreclosure. The Supreme Court of New York granted Defendant’s motion and Plaintiff appeals.

Synopsis of Rule of Law. A deed that is executed as security for a loan of money will be treated as a mortgage. A borrower has an unwaivable right to redeem the property upon payment of the loan.

Facts. Plaintiff mortgaged her property to Defendant for a loan at an alleged usurious rate. Plaintiff brought this action to declare the mortgage null and void on the ground of usury. Prior to trial the parties settled. Plaintiff agreed to execute a mortgage to Defendant in the sum of $101,303.59 and a deed in lieu of foreclosure. Plaintiff swore under oath that she understood the terms of the mortgage including the term that stated if she defaulted, Defendant could record the deed and become owner of the property. Plaintiff defaulted and Defendant recorded the deed. Thereafter Defendant brought this motion.

Issue. Whether Plaintiff waived her right of redemption.

Held. No. Plaintiff cannot waive her right of redemption.

Discussion. It is clear that the deed was executed with the intent it be security for Plaintiff’s $101, 303.59 debt to Defendant. As such it was a mortgage and Plaintiff could not waive the right to redeem the property.