Real Estate Foreclosure Auction: New York Legal Guide

New York strictly enforces judicial foreclosures, requiring lenders to file a lawsuit in the Supreme Court of the county where the property sits. Unlike states allowing non-judicial power-of-sale foreclosures, New York courts must issue a Judgment of Foreclosure and Sale before any public auction takes place.

Auctions occur at the county courthouse or a location designated in the judicial order. The court-appointed referee reads the terms of sale aloud, establishes the bidding increments, and manages the live bidding process among present participants.

The foreclosing lender usually submits the opening bid, often structured as a credit bid up to the total judgment amount. If no third-party bidder exceeds this threshold or the lender's designated maximum, ownership reverts to the lender as Real Estate Owned (REO) property.

Under the Protecting Tenants at Foreclosure Act and New York RPAPL 753, bona fide tenants generally retain the right to occupy the premises for the remainder of their lease term or at least 90 days following written notice. Third-party bidders receive protection against improper referee conduct or post-sale order alterations through court oversight.

If the former owner or occupants remain in the property after title transfers, the new owner cannot engage in self-help remedies. The purchaser must issue a 10-day notice to quit and file a summary holdover proceeding under RPAPL 713 or seek a Writ of Assistance from the Supreme Court to gain lawful possession.

Failure to serve required statutory notices under RPAPL 1303 or RPAPL 1304 creates jurisdictional defects that render foreclosure judgments voidable. Fraudulent assignment of mortgage notes or improper affidavits of service frequently lead to post-sale motions to vacate the auction.

SJKP's attorneys represent borrowers seeking emergency orders to show cause to stay upcoming auctions, conduct due diligence title searches for investors, and assist lenders in obtaining deficiency judgments under RPAPL 1371. Drawing on our attorneys' combined experience, our firm protects client assets and secures clear property title throughout New York.