In 2001, the New York Uniform Commercial Code was amended to require lenders to amend previously filed U.C.C. liens against your co-op apartment to include a Cooperative Addendum. The amendment (which also governed co-op liens filed after the law went into effect) gave your Lender until June 30, 2006 to update their previous filings to include the Cooperative Addendum. The failure of your lender to update the U.C.C. lien field against your co-op resulted in the lien being valid for five (5) years, thereby requiring the lender to file ‘continuations’ of the lien to keep the lien active and enforceable until a U.C.C. termination as filed. Should the U.C.C. lien filed against your co-op become invalid it is no longer a valid lien against your apartment and the lender has lost its security interest in your home.
The mere fact that the U.C.C. lien filed against your Coop does not contain a Cooperative Addendum does not mean that you are no longer obligated to pay your lender; you are still bound by the terms of the cooperative loan note that you signed. However, depending on the facts and circumstances that surround your loan and the status of your repayment you may find the U.C.C. amendment to be a very useful as part of your legal strategy.
If you are in default of your loan re-payment obligations the lender has six years to commence a lawsuit against you to enforce its rights under the note, or be time- barred. So, what should happen in the event that: your lender has failed to include the Cooperative Addendum to the U.C.C. lien it filed against your coop apartment and has not filed the requisite continuations; and, the landlord has not commenced a law suit against you more than six years after you stopped or are in default of making payments under the note? Couple this set of facts with the legal doctrine that the courts will not permit a borrower to use the statute of limitations defense as a cause of action upon which to seek affirmative relief (statute of limitations can only be used as a defense if you are sued by your lender in this fact pattern). Interesting brain teaser and lawsuit.
If you have a coop loan it can’t hurt to review the paperwork or check the public record to be sure that the lender properly filed the Cooperative Addendum and/or continuations along with the U.C.C. lien that it filed against your apartment.