Title Complication Leads To Homeowner’s Nightmare

When looking for his new house, Ronald Fisher, a local civic leader, knew he wanted to stay in the community he had lived in his entire life.

He and his partner, James Christensen, found their dream house in 111 Sylvan Avenue in Flanders, a three-bedroom ranch on a quiet street in the Bay View Pines community.

For one year it was new homeowner bliss. But the utopia cracked on April 7, 2016, when Mr. Fisher opened the mailbox to find a letter from Suffolk County National Bank saying the property would likely be seized and sold if he did not pay a lien against the property.

“I had no knowledge of the lien,” Mr. Fisher said. “I couldn’t protect myself, it wasn’t my fault.”

Confused, he contacted the bank and learned that the previous owners, who were six siblings, had defaulted on a loan for the house, resulting in a lien of almost $200,000 against the property. The timing of the lien coincided with when Mr. Fisher and Mr. Christensen took ownership of the property, having been issued between the final signing date and the day the sale was registered with the Suffolk County Clerk’s office.

Now Mr. Fisher is at the beginning of a legal battle to clear the lien from his 0.01-acre property—as well as his name. Because the bank took legal action against the property owners, and because of an error on the part of his title company, the house is listed on several internet sites as being in foreclosure. Clients, acquaintances and random strangers have been asking him about the status of the house and in some cases offering to buy the property.

“Customers of mine were asking me about it, it’s embarrassing,” said Mr. Fisher, whose company, Fisher Signs and Shirts in Southampton, makes business signs and does the lettering on commercial vehicles. “Customers have been offering me loans and saying that if you are hitting hard times we can get you through the end of the summer. I had to explain it to them.”

Mr. Fisher had purchased the home in March 2015 from Michael, Thomas, James, Robert, Kevin and Kathleen Lennon. He’d originally made an offer in September 2014, but the initial title search conducted by NJ Lenders Corp. revealed two liens against the property, so the Lennon family had to settle the liens before the sale could move forward.

“I knew about those two liens, and the title company knew about them, and they were settled to the bank’s satisfaction,” Mr. Fisher said. “I was thinking the title company is on top of it and they are being thorough and making sure that I am protected, but no.”

After six months, the issue was straightened out and the sale was able to go through. According to the bank, however, unbeknown to four of the six siblings, on October 31, 2008, Michael Lennon had entered into a loan agreement with Suffolk County National Bank in which he was granted a commercial line of credit—using the house as collateral. In 2012 he defaulted on that loan, according to the bank, which sued him on March 2, 2012.

In February 2015, a judge ruled in favor of the bank. However, because the case was not finalized and a dollar amount had not yet been awarded, the results did not appear in the NJ Lenders Corp. report to Mr. Fisher and Mr. Christensen. The pair went forward with the sale, closing on the house on March 20, 2015. Six days later, the judge awarded the bank $191,118 for the defaulted loan. However, because the deed for the house sale had not yet been filed with the Suffolk County Clerk’s office—it would not be filed until April 3—the property was still listed as an asset held by the Lennon family and was named in the decision.

A year later, on April 7, 2016, Mr. Fisher received the letter informing him of the lien.

“We had no idea,” he said. “We started improving the house, we redid the inside, moved a shed, got a new COO [certificate of occupancy] on everything, we did all this work on our house.”

On June 6, Suffolk County National Bank officially filed a lawsuit against Mr. Fisher and Mr. Christensen, as well as the Lennon siblings, seeking its awarded judgment. Now it is up to the new homeowners to prove that they did in fact own the house when the judgment was issued and it therefore should not have been included in the list of Mr. Lennon’s assets. Since the date the lien was filed, some money has been collected from the Lennon family, lowering the amount that is still owed to $110,593.

“The Lennon siblings conveyed the title in an attempt to avoid an encumbrance that would have resulted from a judgment,” the bank’s lawsuit states. The Lennons’ attorney, Jeff Basso of East Hampton, did not immediately return calls seeking comment on behalf of the siblings.

To make matters worse, Fidelity National Title Insurance—which holds the title insurance policy for Mr. Fisher—failed to respond to the bank within the allotted time period to say it planned to fight the lien, meaning the house was then listed in county data bases as being in foreclosure.

Mr. Fisher and Mr. Christensen are waiting for a court date, which will take a least a year, in the hope that a judge will rule that they owned the house before the monetary judgment against the Lennons was awarded to the bank. That would absolve the new homeowners of responsibility for the lien.

For now Mr. Fisher sits in limbo, although he said he plans to continue to live in his house for a long time. He also noted that he still has a good relationship with four of the six Lennon siblings—in fact, two of them still live in a house next door. He added that if worse comes to worst and a judge rules against him, he will find a way to pay off the remainder of the lien himself to hang on to his home.

“I wanted to be in Flanders,” he said simply. “I wanted to be in Bayview Pines because I love that location. It is on the second half of a dead-end street that goes right up to the water. I never even thought of turning back.”