15 Mar 21

New York Penal Law 185.10: Fraudulent disposition of mortgaged property

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Last Updated on: 17th August 2023, 07:29 pm

Real Estate Fraud: Understanding Fraudulent Disposition of Mortgaged Property

Real estate markets across the country are very sensitive markets, which rely heavily on the continued trust of banks and mortgage lenders. Because of this, there are laws in almost all areas of the country that protect lenders against fraudulent mortgage-related activities. In New York, one law that is designed to protect lenders is fraudulent disposition of mortgaged property.

What is Fraudulent Disposition of Mortgaged Property?

The crime of fraudulent disposition of mortgaged property makes it illegal for a person to sell or transfer an interest in a property that is currently encumbered by a mortgage. In order for any sale or transfer to be made valid, it will require approval of the mortgage lender and all other interested parties.

Examples of the Crime

Due to the complexity of real estate ownership, fraudulent disposition of mortgaged property is an important law that protects banks. An example of this crime would be if a person purchases a home and takes out a mortgage on the home. If the person then attempts to sell the property to another person and the mortgage lender is not made aware, or paid off, the process of transferring ownership would be considered fraudulent disposition of mortgaged property.

This law is the same for any real estate owner, including residential and commercial. It pertains to sale, assignment, or any form of transfer that was intended to defraud the mortgage lender.

Common Legal Case Defenses

If you have been accused of fraudulent disposition of mortgaged property, it would be a good idea to hire a NYC defense attorney. NYC criminal lawyers are experienced in defending these types of cases, and related offenses. In many cases, this can be an easy case to defend. In order to prosecute this case, it has to be proven that you fully intended to defraud the mortgage lender.

To prove your intent to defraud, the prosecutor will likely look to the timeline of events that took place. They may also look to seize email or text-messaging records to see if they can legally prove the fraud took place. If the case is dismissed, you may still face civil suits and other action from the mortgage lender.

Penalty for the Crime

If you have been found guilty of fraudulent disposition of mortgaged property, you could face a penalty for the crime. The crime is technically a Class A misdemeanor, which means that you could face up to one year of prison. In most cases, assuming that this is a first offense, you will likely avoid jail time altogether. Instead of jail time, you will likely be put on some form of probation and may be forced to make financial restitution if the lender suffered a loss due to the fraud.

Beyond imprisonment, you may face a financial penalty. Judges have levied fines in excess of $10,000 for these cases.


In conclusion, fraudulent disposition of mortgaged property can be a difficult crime to convict. However, if you were accused of this crime, it would be a good idea to hire an attorney for support. The attorney will be able to provide you with a number of different services including consultation and attempt at building a case. In most situations, the NYC criminal attorneys will be able to negotiate a settlement with the prosecutor before the case even goes to trial. This normally will result in a shorter probation period and lower financial penalty levied by the court.