Owner in Default Action Must be Personally Served

New York’s Civil Practice Laws and Rules provide for appointment of temporary receivers “where there is danger that the property will be . . . materially injured or destroyed.” The court observed that the Court of Appeals had not addressed the issue of whether common charges owed to a condominium board by a unit in foreclosure may be paid over to the board, or whether the monies were properly considered part of the funds belonging to the first priority lien holder.

The board cited the condominium bylaws, which provide that when the board brings an action to foreclose on a common charges lien, the defaulting unit owner shall be required to pay a reasonable rental amount for use of the unit, and the board is entitled to the appointment of a receiver to collect the rents.

While the mortgagee did not necessarily oppose the board’s motion, the motion could not be granted on procedural grounds. At the time the order to show cause was signed, the court directed the board specifically to serve Logan on or before January 14, 2010, by hand delivery to Unit 17-19. However, when the server received no response from two of Logan’s units, it affixed copies of the order conspicuously on both doors.

The court concluded that Logan was served, in effect, by substituted service, commonly referred to as “nail and mail.” Because the board did not specify “in-hand delivery” to the server, the court surmised that it must have misinterpreted “hand delivery” to allow for use of substituted service. Nevertheless, the court explained that when a party is directed to be served by hand delivery, it should be understood that it means “personal delivery,” and the board’s failure to adhere to the court order’s directive must result in denial of the motion.

The motion was denied for improper service and without prejudice to renewal.