Clarifying Foreclosure Standing under New York Law: Holder vs. Assignee Rights in Courchevel 1850 LLC v. Koznitz I LLC

Introduction

Courchevel 1850 LLC v. Koznitz I LLC is a 2025 Second Circuit summary order that addresses who may properly bring a mortgage foreclosure action under New York law. The appeal arose from a foreclosure suit filed by Courchevel 1850 LLC (“Courchevel”) against Mohammed Alam (the original borrower) and Koznitz I LLC (“Koznitz”), the subsequent owner of the mortgaged property by deed. The key issues on appeal were (1) whether Courchevel had standing to foreclose by virtue of its possession—or assignment—of the promissory note and (2) whether Koznitz, as successor‐in‐interest to the property, could challenge the adequacy of Courchevel’s notice of default when it was not a party to the underlying note or mortgage.

Summary of the Judgment

The Second Circuit affirmed the district court’s grant of summary judgment in favor of Courchevel and its denial of Koznitz’s motions to dismiss and for summary judgment. The court held that:

• Under New York law, Courchevel had standing to bring the foreclosure action because it either (a) was a “holder” of the negotiable instrument (the note) with all necessary endorsements or (b) in the alternative, a valid “assignee” by physical delivery of the note prior to suit.
• Koznitz, not being a party or assignee of the note or mortgage, lacked standing to assert that Courchevel’s notice of default was deficient. Absent substitution on the loan documents, a successor‐in‐interest to title may not raise personal defenses belonging to the original mortgagor.

Analysis

Precedents Cited

• OneWest Bank, N.A. v. Melina, 827 F.3d 214 (2d Cir. 2016) – Held that to establish foreclosure standing under New York law, a plaintiff must show that it was either the holder or assignee of the note when suit commenced.
• Wells Fargo Bank, N.A. v. Rooney, 19 N.Y.S.3d 543 (2d Dep’t 2015) – Affirmed that possession of the note with proper endorsements establishes standing.
• U.S. Bank, N.A. v. Collymore, 890 N.Y.S.2d 578 (2d Dep’t 2009) – Recognized that even if negotiation formalities are defective, physical delivery of the note can effect a valid assignment for foreclosure standing.
• Donoghue v. Bulldog Invs. Gen. P’ship, 696 F.3d 170 (2d Cir. 2012) – Clarified de novo review standard for challenges to subject matter jurisdiction under Fed. R. Civ. P. 12(b)(1).
• Johnson v. Killian, 680 F.3d 234 (2d Cir. 2012) – Articulated the summary judgment standard under Fed. R. Civ. P. 56.

Legal Reasoning

1. Standing as Holder or Assignee. The court began with the undisputed fact that Courchevel was in physical possession of the note, complete with a chain of endorsements on allonges. Under the New York Uniform Commercial Code (N.Y. UCC §1-201(b)(21)(A)), a “holder” of a negotiable instrument is the person in possession of an instrument payable to an identified person, when that person is in possession. Negotiation of an “order” note requires transfer of possession plus any necessary endorsement (N.Y. UCC §3-202). The court observed that even if Koznitz had created a triable issue as to whether the endorsements were “firmly affixed” (the allonge staple issue), Courchevel still would have standing as an assignee because physical delivery of the note before suit establishes a valid assignment (Collymore).

2. Scope of Review. Applying de novo review to both the 12(b)(1) jurisdictional challenge and the Rule 56 summary judgment, the appellate court construed all facts and inferences in favor of Koznitz, yet found no genuine dispute that Courchevel held either holder or assignee rights.

3. Notice‐of‐Default Defense. Under New York law, claims of non‐compliance with a mortgage’s notice‐of‐default requirement are “personal defenses” that only parties to the note and mortgage may assert (Bank of N.Y. Mellon Tr. Co., N.A. v. Obadia, 111 N.Y.S.3d 59 (2d Dep’t 2019)). Koznitz, having acquired only title to the property by deed and never being added to the loan documents, lacked standing to challenge the adequacy of Courchevel’s default notice.

Impact

This decision reinforces two important principles in New York foreclosure practice:

• Holder vs. Assignee Standing: A plaintiff can cure procedural defects in negotiation by demonstrating an assignment via physical delivery of the note, ensuring robust protection for transferees in multi-step securitization chains.
• Limits on Successor‐in‐Title Defenses: Purchasers of mortgaged property who are not parties to the debt instruments cannot interpose personal defenses under the mortgage, promoting certainty in foreclosure proceedings.

Future litigants will look to Courchevel for clarity on when and how possession or delivery of the note confers standing, and on the strict boundary between property interests and contractual rights under mortgage documents.

Complex Concepts Simplified

• Holder: The person in possession of a negotiable instrument (e.g., promissory note) payable to an identified payee. Holding requires possession plus proper endorsement when the note is “payable to order.”
• Assignee: A transferee of rights under a contract. Under UCC and New York caselaw, an assignee of a note may foreclose if it can prove valid assignment—often by showing transfer of physical possession.
• Allonge: A paper sheet affixed to the note that carries endorsements when there is no space remaining on the original document. UCC §3-202(2) requires that the allonge be “firmly affixed.”
• Notice of Default: A contractual requirement in many mortgage agreements that the lender notify the borrower of a default before initiating foreclosure. Only parties to the mortgage contract may assert defects in this notice.

Conclusion

Courchevel 1850 LLC v. Koznitz I LLC reaffirms that under New York law, physical possession of the original note—with all necessary endorsements—conveys foreclosure standing either as a holder or, alternatively, as an assignee by delivery. Additionally, the decision underscores that a transferee of title alone may not raise personal defenses under the note or mortgage. Together, these holdings provide clear guidance to lenders, servicers, purchasers, and courts on the proper mechanics and limitations of standing in mortgage foreclosure actions.