172 Madison: A Firm Warning To Potential 'Bad Boys'

Law360, New York (October 21, 2013, 12:37 PM ET) -- A recent New York court decision has cleared the way for lenders to seek recovery against nonrecourse carveout, or “bad boy,” guarantors during a pending mortgage foreclosure action if a borrower files for bankruptcy.

In so doing, the court answered a question that, surprisingly, was thus far apparently unanswered in a reported decision in New York: whether New York’s “one action rule” under RPAPL § 1301 bars a lender from obtaining a money judgment against a “bad boy” guarantor for the debt if a mortgage borrower...
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