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Supreme Court, Kings County, July 20, 2007
APPEARANCES OF COUNSEL
Borchert, Genovesi, LaSpina & Landicino, P.C., Whitestone (Robert W. Frommer of counsel), for Brooklyn Organization LLC. Shapiro & DiCaro, LLP, Commack (Victor Spinelli of counsel), for plaintiffs.
{**17 Misc 3d at 269} OPINION OF THE COURT
Abraham G. Gerges, J.
In this foreclosure action, The Brooklyn Organization LLC (Brooklyn or movant) moves for an order: (1) staying any closing in this matter pending resolution of the exceptions in its title report;
(2) directing plaintiff to cure said exceptions as a precondition to any sale or closing; or, in the alternative, (3) directing that the sale be vacated in its entirety and that plaintiff return the deposit paid at said sale to [*2]movant.
Facts and Procedural Background
This action was commenced to foreclose the tax lien certificate on property located at 1105 Dumont Avenue in Brooklyn and owned by defendant Mary Mayfield. A judgment of foreclosure and sale was entered on December 4, 2004 and a foreclosure sale was held on November 9, 2006.
At the sale, ZZ Management LLC was the successful bidder, bidding $310,000, or more than $200,000 over plaintiff's upset price. Pursuant to the terms of sale, ZZ Management was required to pay a deposit of $37,000 to the referee and to pay the balance of the purchase price on December
11, 2006. Thereafter, ZZ Management assigned its bid to Brooklyn.[FN1] After requesting that First American Title Insurance Company do a title search in order to obtain title insurance, Brooklyn discovered that the deed that conveyed the property from the City of New York to Mayfield (the Mayfield deed), dated June 19, 1986, gave the City of New York a right of reverter pursuant to Executive Order No. 50 (Koch) of the City of New York (66 RCNY 10-14). First American refuses to insure title without excepting the right of reverter. Similarly, plaintiff's title company, Ticor Title Insurance Company, will not insure title over the reverter interest.
At movant's request, plaintiff contacted the City to ascertain if it would waive its right of reverter; the City declined. Thereafter, the closing was scheduled, with time being of the essence. The closing has since been cancelled and the instant order to show cause followed.
The Terms of Sale
As is relevant to the instant dispute, the terms of sale provide that if the successful bidder fails to complete the purchase, plaintiff can elect to reschedule the sale and retain the down{**17 Misc 3d at 270} payment, to be applied to the proceeds of the second sale, and if the premises are sold at a second sale, the purchaser will be held liable for any difference between the first and second bid.[FN2] The terms of sale further provide that the premises [*3]shall be sold in "as is" condition and subject to"covenants, restrictions and easements, if any, of record."[FN3] Finally, as is also
relevant to the instant dispute, the terms of sale provide that if the purchaser raises written objection to title, plaintiff shall have the option of providing fee title insurance from a title insurance company of his choice, at purchaser's expense.[FN4]
The Right of Reverter
As is relevant herein, the Mayfield deed provides that in the event that Mayfield defaulted in her obligations to rehabilitate the premises; attempted to transfer the property before a permanent{**17 Misc 3d at 271} certificate of occupancy was issued without the consent of the Commissioner of the Department of Housing Preservation and Development (HPD); defaulted on a loan issued to her by HPD; or failed to pay taxes, assessments, water charges, sewer rents or other municipal charges:
"[T]hen at the option of the City title to the Disposition Area shall revert to and revest in the City and the City shall have the right subject to the laws of the State of New York to re-enter and take possession of the Disposition Area and to terminate the estate of the Grantee. It is the intent of this Deed, that the conveyance of the Disposition Area to the Grantee is hereby made subject to a condition subsequent to the effect that in the event of any default, failure, violations, or other action or inaction by the Grantee (his permitted successors and assigns) specified in the above subdivisions of this Paragraph, [*4]failure on the part of the Grantee (its successors and assigns) to remedy, end, or abrogate such default, failure, violations, or other action or inaction, within the period and in the manner stated in such subdivisions, the City at its option may declare a termination and reversion of Grantee['s] interest in the Disposition Area and any improvements thereon in favor of the City of the title and of all the rights and interests in and to the Disposition Area conveyed by this Deed to the Grantee and that such title and all rights and interests of the Grantee, and any assigns or successors in interest to and in the Disposition Area, shall revert to and revest in the City." (Mayfield deed art 4.)
The Parties' Contentions
In support of its motion, Brooklyn alleges that plaintiff, which is a trust that holds City tax liens, is trying to force it to close, while still subjecting it to the City's right of reverter. Movant further argues that First American has raised the issue of whether the City has already become the owner of the subject property pursuant to its right of reverter because of the failure of Mayfield to comply with the terms of her deed. Movant thus concludes that since it would be unfair to allow the City to foreclose on its tax lien, while still holding its right of reverter, the court should exercise its equitable power and set aside the sale.
In opposition to the motion, plaintiff argues that both the judgment of foreclosure and the terms of sale contain explicit{**17 Misc 3d at 272} language providing that the premises are being sold subject to any covenants, restrictions and declarations. Hence, movant is not entitled to an order setting aside the sale on the ground of the existence of the City's right of reverter. Moreover, ZZ Management could have discovered the right of reverter prior to bidding on the property and Brooklyn could have performed a diligent title search prior to agreeing to an assignment. Plaintiff further argues that movant is similarly not entitled to the return of its down payment, since the terms of sale provide that if purchaser fails to pay the balance of the purchase price, the referee will retain the deposit (terms of sale, paras 2 [2]; 4).
The Law
As a threshold issue, it must be recognized that "[a]s a general rule, a purchaser at a foreclosure sale is entitled to a good, marketable title" (Jorgensen v Endicott Trust Co., 100 AD2d 647, 648 [1984]; Heller v Cohen, 154 NY 299, 306 [1897]). In this regard, the court notes that:
"A marketable title has been defined as one that may be freely made the subject of resale
(Trimboli v Kinkel, 226 NY 147, 152; see 62 NY Jur, Vendor and Purchaser,

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