No. A-4176-15T2

June 6, 2017 (Date Decided)

Judge Currier

FOR APPELLANT: Kathleen Cavanaugh (Sandelands Eyet LLP, attorneys; Robert D. bailey, of counsel and on the briefs).

FOR RESPONDENT: Tiffany L. Byczkowski (McGovern Legal Services, LLC; Ms. Byczkowski, on the brief).

Defendant Nationstar Mortgage LLC appealed from summary judgment entered in favor of plaintiff. In March 2007, Adam Mitchell purchased a condominium unit in a property managed by plaintiff, and executed a mortgage on the unit that was later assigned to defendant. Mitchell defaulted on the mortgage and vacated the condo; Mitchell also owed unpaid monthly fees and other assessments to plaintiff. After he vacated the condo, defendant replaced the locks on the unit and winterized the property.

Plaintiff instituted an action against Mitchell to recover the unpaid monthly fees and assessments. Plaintiff later amended its complaint to include defendant, arguing that the lender’s assignee was responsible for the fees and assessments because it was in possession of the property. The trial court granted summary judgment to plaintiff, ruling that defendant was a mortgagee in possession and therefore liable for condo fees. The trial court noted that no one could gain possession or occupation of the condo without defendant’s consent, which constituted exclusive control sufficient to establish the status of mortgagee in possession.

On appeal, defendant argued that changing the locks and winterizing the condo did not render it a mortgagee in possession. The court agreed and reversed the grant of summary judgment in favor of plaintiff. The court noted that once a mortgagor defaulted, the lender had the right of possession subject to the mortgagor’s equity of redemption; however, the court further noted the mortgagee did become the owner upon default unless and until there was a foreclosure and sale of the property to the mortgagee.

Although the court acknowledged that a mortgagee in possession was liable for condo fees, it ruled that defendant had not become a mortgagee in possession because it had not taken sufficient management and control of the property. The court noted that defendant had not occupied the property, was not collecting rent or any other profit, and was not repairing the unit. The court rejected plaintiff’s contention that the mere act of changing the locks, thereby ensuring that no one could enter the condo without defendant’s consent, was sufficient to establish defendant’s exclusive control. The court held that defendant’s efforts to physically secure the unit and protect its collateral were insufficient to constitute dominion over the property. Finally, the court rejected plaintiff’s unjust enrichment and quantum meruit theories, since defendant had received no benefit nor had any agreement with plaintiff.