Bronx Condo Owner Seeks Return of Deed Conveyed in Alleged Foreclosure Rescue Scam and Deed Theft
VMW LAW, New York, March 2010: The Bronx Supreme Court in New York views it as a case of an alleged "foreclosure rescue scam" or "deed theft". Deed theft is the description given to the situation where property owners are solicited with offers of private, nonqualifying, short term financing to pay off a delinquent debt with the requirement that the property owner conveys title to the property as collateral in order to finalize the short-term financing. The property is then sold by the fraudster for its the fair market value and ALL of the equity is retained by the fraudster.
FACTS
In Diallo v, Grand Bay Assoc, Enters., Inc., plaintiff Ibrahim Diallo ran into financial difficulties in 2001 and needed urgent financial assistance to rescue the condominium unit her purchased in 1994. In the process he met Alvin Merrifield. The Complaint alleges that Merrifield proclaimed he was in a position to help Diallo refinance and avoid foreclosure. Plaintiff alleges that Merrifield then placed him in contact with Kathleen Bradshaw, an attorney, who allegedly convinced Diallo to convey title to the property to defendant Grand Bay Associates Enterprises, Inc. (Grand Bay).
Diallo claims that his understanding of the agreement was that: (1) Merrifield to pay off his $22,000 mortgage; (2) plaintiff to pay the maintenance arrears; and (3) plaintiff to make $700 monthly payments to Merrifield, $350 of which was to be applied to the unit's monthly maintenance fee. Diallo further alleges that the arrangement was to last four to six months, during which time Merrifield would obtain refinancing on plaintiff's behalf. Plaintiff alleged that Merrifield paid off the mortgage, but failed to obtain refinancing for plaintiff as agreed. Nevertheless, plaintiff continued to pay Merrifield the agreed upon $700 monthly installments, which from 2001 to 2004 added up to $20,844.23.
Problems developed when in 2003, a condominium's management started foreclosure proceedings against Grand Bay for failure to pay the unit's monthly maintenance fees. Diallo claims that he stopped making the $700 monthly payments to Merrifield and as a result GBA Enterprises, Inc. instituted eviction proceedings against him. During the eviction proceedings Diallo alleges that he discovered that Kathleen Bradshaw, the attorney Merrifield referred him to, was representing GBA Enterprises, Inc. in the eviction action.
Diallo then commence proceedings in Bronx Supreme against Grand Bay seeking a declaratory judgment of ownership of the condominium unit in fee simple or, in the alternative, to void the deed conveyance based on fraudulent inducement.
Court Amended Plaintiff's Complaint Sua Sponte
The case becomes even more interesting with the court's sua sponte amendment of the complaint, a rear action taken by courts in New York. In amending the complaint the court interposed additional defendants noting that there were business entities involved: (1) Grand Bay Associates Enterprises, Inc., to which plaintiff conveyed ownership of the condominium, and (2) GBA Enterprises, Inc., which interposed an answer in response to the suit and commenced eviction proceedings against plaintiff. Mr. Merrifield was the President of both entities the court found. Further the court found that Bradshaw had served as the attorney for all of the parties at various points. The court therefore amended the complaint in the interest of justice.
The case is Diallo v. Grand Assoc. Enters., Inc. No. 15044/04, 2010 NY Slip Op 50214[U]
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