On December 7, 2023, Justice Ruchelsman of the Kings County Commercial Division issued a decision in BH Sterling Realty LLC v. Longoria, 2023 NY Slip Op. 34277(U), holding that a notice of pendency does not provide sufficient notice of a competing interest in real estate, explaining:
It is well settled that when two or more parties maintain contracts to purchase the same property priority is given to whichever contract is recorded first. The filing of a notice of pendency is not a substitute for the filing of a contract. Notwithstanding the fact that New York is a race notice state the notice of pendency is simply insufficient to comply with RPL § 294(3). In Bello v. Oullettei 211 AD3d 784, 181 NYS3d 577 [2d Dept., 2022] a buyer, Vertex, closed on property on June 7, 2017. The plaintiff then learned of Vertex’s interest in the property and filed a notice of pendency on June 20. Vertex recorded its deed on July 10. Vertex moved seeking to cancel the notice of pendency and for a determination it was the sole owner of the property. The court granted Vertex’s motions. The court explained that the status of good faith purchaser for value cannot be maintained by a purchaser with either notice or knowledge of a prior interest or equity in the property, or one with knowledge of facts that would lead a reasonably prudent purchaser to make inquiries concerning such. The court concluded that Vertex did not have either actual or constructive notice of plaintiff’s claims to the property. Significantly, the court concluded that the filing of a notice of pendency against the property before Vertex filed its deed did not negate Vertex’s status as a good-faith purchaser.
In this case, there was no actual or. constructive notice that would have notified Knickerbocker of the plaintiff’s prior contract. The mere fact a copy of plaintiff’s contract was contained in a court file concerning a foreclosure of the property is not sufficient facts that would lead a reasonable person of knowledge of a prior interest in the property. This is specially true where the foreclosure action was resolved by the purchase of Knickerbocker. Thus, Knickerbocker had no constructive notice of the contract with plaintiff at all.
(Internal quotations and citations omitted).