Prior to the enactment of Real Property Actions and Proceeding Law (“RPAPL”) § 1302-a, defendants waived their affirmative defense of standing in a residential foreclosure action by failing to raise that defense in an answer or a pre-answer motion to dismiss. See, e.g., JP Morgan Chase Bank, Nat’l Ass’n v. Butler, 129 A.D.3d 777, 780 (2d Dep’t 2015). However, since the enactment of RPAPL § 1302-a, which became effective on December 23, 2019, defendants can raise a standing defense at any time in a residential foreclosure action. This issue arises both where the borrower defaulted in the foreclosure action and seeks to vacate that default to assert a standing defense and where an answer was filed but no standing defense was initially asserted. The Second Department has recently issued decisions addressing both the interplay between the new statute and a borrower’s default in answering and an answering defendant’s ability to amend to assert a standing defense after summary judgment was granted. In addition, the Court of Appeals has recently clarified application of the statute in the context of an appeal of an order entered prior to the enactment of RPAPL § 1302-a.
In November 2020, in interpreting RPAPL § 1302-a for the first time, the Appellate Division, Second Department held that standing remains a non-jurisdictional defense, which a defendant borrower must affirmatively raise to put it at issue in a foreclosure action. See GMAC Mortg., LLC v. Coombs, 191 A.D.3d 37, 47 (2d Dep’t 2020). The Second Department noted that “waiver of the affirmative defense of standing pursuant to CPLR 3211(e) may be retracted through the amendment of a pleading pursuant to CPLR 3025.” Id. at 45. In addition the Court held that the Supreme Court, in its discretion, may permit a defendant to first raise a standing defense in opposition to summary judgment. Id. at 48-49. In Coombs, although the Second Department determined that the trial court should have permitted the defendant to raise an affirmative defense of standing in an amended answer, the Appellate Division also found that plaintiff had submitted sufficient evidence of standing in its reply papers. Id. at 50-51; see also One W. Bank, FSB v. Rosenberg, 2020 NY Slip Op 08070 (2d Dep’t 2020) (“Although the defendant did not waive the defense of standing, the evidence submitted by plaintiff demonstrated its standing, and the defendant failed to raise a triable issue of fact”) (internal citations omitted); but see U.S. Bank N.A. v. Blake-Hovanec, 2021 NY Slip Op 00893, *8-*9 (2d Dep’t 2021) (finding that the trial court should have granted defendant’s cross-motion to amend to assert an affirmative defense of lack of standing, and, “[i]n response, the plaintiff failed to demonstrate its standing as a matter of law”).
In the context of a defaulting borrower, rather than an answering defendant who omitted a standing defense, the Second Department determined that while a standing defense can constitute the “meritorious defense” required to vacate such default, a defendant borrower must still establish a reasonable excuse for that default first in order to raise any potentially meritorious defense of standing. See, e.g., One W. Bank, FSB v. Rosenberg, 189 A.D.3d 1600, 1601-1602 (2d Dep’t 2020) (holding the trial court should have found defendant’s excuse reasonable although defendant failed to establish plaintiff’s lack of standing and “compliance with statutory and/or contractual notice requirements” to establish its prima facie entitlement to foreclosure).
Additionally, in December 2020, the Court of Appeals closed the year with a decision that offered some clarity as to appellate review of standing waiver issues following the enactment of RPAPL § 1302-a, seemingly finding that an appellate court looks at standing based on the law at the time summary judgment was granted. See U.S. Bank N.A. v. Nelson, 36 N.Y.3d 998, 2020 N.Y. LEXIS 2869, *1 (Dec. 17, 2020). More specifically, in Nelson, the Court of Appeals affirmed the Second Department’s decision that defendants waived their standing defense because they “failed to raise standing in their answers or in [timely] pre-answer motions as required by CPLR 3211(e) and accordingly, under the law in effect at the time of the orders appealed from, [and so] the defense was waived.” Id. at *1 (emphasis added). Notably, RPAPL § 1302-a was enacted during the pendency of the appeal.
However, the Court of Appeals did not reach the issue of whether this statute permits defendants to raise the standing defense at the trial court, presumably through a motion to vacate and amend the answer, while making clear that an appellate court must review the order appealed from based on the law at the time of the underlying Supreme Court order. Id. Any possible relief under the subsequently enacted statute is left solely to the trial court. Id. at *1-*2 (“Defendants are free to apply to the trial court for any relief that may be available to them under that statute.”) (emphasis added).