Fair-market-value limit on a deficiency judgment
N.Y. Real Prop. Acts. Law § 1371(2), (3)
In plain words
If the sale brings less than you owe, the lender must ask the court for a deficiency judgment within 90 days after the deed is delivered to the buyer. The court decides the fair market value, and the deficiency is based on the higher of that value or the sale price. If the lender misses the 90 days, the sale price counts as full payment.
Who is protected
Borrowers who were personally served or appeared in a New York foreclosure.
When it applies
- Only in New York.
- Only after the foreclosure sale.
What you can do
Oppose an inflated deficiency
Gather proof of the home’s value on the sale date.
Deadline: Respond to any deficiency motion; the lender must file within 90 days of the deed
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Honest limits
- A deficiency is still possible when the value is below what you owe.
- This is general education, not legal advice. Laws change and details matter — check the current official text or talk to a legal aid lawyer or HUD-approved housing counselor.
The law
- State lawRPAPL 1371 — deficiency
N.Y. Real Prop. Acts. Law § 1371(2), (3)
Exact part: (2), (3)
What it says: A deficiency motion must be made within 90 days and is measured against the fair and reasonable market value.
Read the official texthttps://www.nysenate.gov/legislation/laws/RPA/1371
Court cases
- Homeowner lostSame topicMartins v. BAC Home Loans Servicing, L.P.
Martins v. BAC Home Loans Servicing, L.P., 722 F.3d 249 (5th Cir. 2013)
a mortgage servicer acting for a properly assigned mortgagee may foreclose in Texas without possessing the original note, and an oral promise to modify a large loan is not enforceable
- Homeowner lostSame topicMilton v. U.S. Bank National Ass'n
Milton v. U.S. Bank Nat'l Ass'n, 508 F. App'x 326 (5th Cir. 2013) (per curiam) (unpublished)
an agreement to delay a Texas foreclosure falls within the statute of frauds and must be in writing to be enforced
- Homeowner lostSame topicBFP v. Resolution Trust Corp.
BFP v. Resol. Tr. Corp., 511 U.S. 531 (1994)
the price received at a non-collusive foreclosure sale that complied with state law is reasonably equivalent value under the Bankruptcy Code
Related rights
Right to claim surplus money from a foreclosure sale
N.Y. Real Prop. Acts. Law § 1361(1)
If the foreclosure sale brings in more than the debt and costs, the extra money (surplus) is held for the people with a claim to it — often the former owner. You claim it by filing a written notice of claim with the county clerk where the report of sale is filed, then asking the court to pay it out.
Read this rightThe government cannot keep your home equity beyond the tax debt
U.S. Const. amend. VTakings Clause
If your home is taken or sold to pay property taxes, the government may collect what you owe, but it may not keep the extra value. Keeping the surplus is a "taking" of your property without just compensation, which the Fifth Amendment forbids (Tyler v. Hennepin County, 2023). You may be able to claim the surplus, but you usually must follow your state's claim process and deadlines.
Read this rightAfter a discharge, creditors cannot collect the wiped-out debt from you
11 U.S.C. § 524(a)(2)
A bankruptcy discharge wipes out your personal liability for most debts in the case. After that, the law forbids creditors from suing, calling or otherwise trying to collect a discharged debt from you personally. A court can hold a creditor in contempt if there was no fair doubt that its conduct was barred.
Read this rightRenters get at least 90 days' notice after a foreclosure
12 U.S.C. § 5220 note(Pub. L. 111-22, div. A, § 702(a)–(b))
If you rent a home that goes through foreclosure, the new owner must give you a notice to move at least 90 days before you have to leave. If you have a real (bona fide) lease signed before the foreclosure notice, you can usually stay until the lease ends. The exception is when the new owner will live in the home; even then you still get the 90 days' notice.
Read this rightRight to claim surplus after a tax foreclosure sale
N.Y. Real Prop. Tax Law § 1197(1)
After Tyler v. Hennepin County, New York amended its tax-foreclosure law in 2024. Anyone who had an interest in the property right before the foreclosure judgment — including the former owner — can file a claim in court for a share of any surplus from the sale.
Read this rightTenants can stay at least 90 days after a foreclosure
N.Y. Real Prop. Acts. Law § 1305(2)
If you rent a home that goes through foreclosure, the new owner generally must let you stay for the greater of 90 days after a notice, or the rest of your lease. You keep the same lease terms during that time.
Read this right