Court Rules That A Construction Of The New Protecting Tenants At Foreclosure Act Can Be Constitutionally Squared By Limiting It To Only Those Tenancies In Dwellings Or Residential Real Property Where A Federally Related Mortgage Was Foreclosed

In Collado v. Boklari, No. —- N.Y.S.2d —— 2009 (N.Y.Dist.Ct.) N.Y. Slip Op. 29447, the respondent sought to vacate a judgment of possession and eviction on the ground that a recent federal law, Title VII of 2009 Emergency Economic Stabilization, “Protecting Tenants at Foreclosure Act” of 2009, requires that a tenant be provided a 90 day notice before it can be dispossessed of property. The petitioner only used the 10 day notice mandated by New York law. 12 U.S.C. Sec. 5220(a) of the Act reads that the purchaser in foreclosure “(a) in the case of any foreclosure on a federally related mortgage loan or on any dwelling or residential real property * * * shall assume such interest subject to (1) the provision by such successor in interest of a notice subject to vacate to any bona fide tenant at least 90 days before the effective date of such notice * * *.” (Emphasis added). The respondent argued that the use of the word “or” in Sec. (a) spreads the 90 day Notice to Quit requirement beyond HUD, FHA or other federally related properties to “any dwelling and residential property”. The Court analyzed whether this expansion of federal authority to areas not involving federal expenditure is constitutionally permissible and concluded it wasn’t. The court first noted that the Constitution’s Article I, Section 8(1) “Taxation and Expenditure” power, under which Congress created and operates its assorted affordable housing departments, does not extend federal control to every area of human endeavor. The court decided the drafters use of the word “or” was thus an error. It evoked Supreme Court precedent which authorizes a court to ignore the plain meaning of the word “or”, “inserted into a hastily enacted amendment”, to make it consonant with the function sought to be served, citing Clark v. Uebersce Finanz-Korp., 68 S.Ct. 174 (1947); Markham v. Cable, 66 S. Ct. 193 (1945). “Thus, the simplest way to restore constitutionality to Sec. 5220(a) is to simply deem the insertions of the word “or” as a scrivener’s error and to ignore it”. According to the court, by removing the word the statute now reads that “n the case of any foreclosure on a federally related mortgage loan on any dwelling or residential real property * * * .” Under this construction, the statute limits its reach to only those tenancies arising from dwellings or residential real property in which a federally related mortgage was foreclosed.