New Jersey Appellate Division Upholds Priority of Mortgage Over Life Estate

Joy Harmon Sperling and Rachel Packer authored an article titled "New Jersey Appellate Division Upholds Priority of Mortgage Over Life Estate" in a recent edition of the New Jersey Law Journal. The article refers to a decision rendered by the Appellate Division in Ocwen Loan Services v. Quinn, where the Court affirmed a decision of the Superior Court, Passaic County, granting summary judgment to a plaintiff-mortgagee. The Court held that the life estates of two defendants who did not sign the plaintiff's mortgage was subordinated to the mortgage based on the equitable principles recognized by the Court in Sovereign Bank v. Gillis, 432 N.J. Super. 36 (App. Div. 2013), and the principles of replacement and modification. In the affirmed ruling of the trial court, the Hon. Margaret Mary McVeigh allowed the plaintiff to "step into the shoes of its prior mortgage which its own funds satisfied," but capped the amount of plaintiff's priority at $260,000 - the amount of the prior satisfied mortgage, plus an additional $43,019.85 for taxes and insurance advanced by the plaintiff and its predecessors while the mortgage loan was in default. The Court concluded that this result put the defendants in the same position they were in when they signed the prior $260,000 mortgage to which they subordinated their life estates, and for that reason, affirmed the trial court order.