New York’s Real Property Law Section 282 – How A Residential Mortgagor (A Homeowner With A Mortgage) Can Make The Lender Pay Legal Fees!

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This new law passed last year allows a residential mortgagor (homeowner) to recover legal fees against a mortgage lender under certain circumstances. Homeowners in foreclosure should plead a counterclaim under RPL 282 for recovery of legal fees under any one-sided legal fee clause in the mortgage that allows a mortgage lender to recover its fees if it prevails – courts can treat these clauses as mutual and give them reciprocity in favor of the homeowner. Here is the law as of 1/19/12 from the Cornell law library:

§ 282. Mortgagor’s right to recover attorneys’ fees in actions or
proceedings arising out of foreclosures of residential property. 1.
Whenever a covenant contained in a mortgage on residential real property
shall provide that in any action or proceeding to foreclose the mortgage
that the mortgagee may recover attorneys’ fees and/or expenses incurred
as the result of the failure of the mortgagor to perform any covenant or
agreement contained in such mortgage, or that amounts paid by the
mortgagee therefor shall be paid by the mortgagor as additional payment,
there shall be implied in such mortgage a covenant by the mortgagee to
pay to the mortgagor the reasonable attorneys’ fees and/or expenses
incurred by the mortgagor as the result of the failure of the mortgagee
to perform any covenant or agreement on its part to be performed under
the mortgage or in the successful defense of any action or proceeding
commenced by the mortgagee against the mortgagor arising out of the
contract, and an agreement that such fees and expenses may be recovered
as provided by law in an action commenced against the mortgagee or by
way of counterclaim in any action or proceeding commenced by the
mortgagee against the mortgagor. Any waiver of this section shall be
void as against public policy.
2. For the purposes of this section, “residential real property” means
real property improved by a one- to four-family residence, a condominium
that is occupied by the mortgagor or a cooperative unit that is occupied
by the mortgagor.