Why “Void” Means Void: The Cutoff Date, Trust Agreements, and Standing in Foreclosure Cases

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Going Back to Basics

Rod Ciferri, a New York attorney and recent guest on the Neil Garfield Show, has provided extensive research and a clear explanation of why late acceptance of loans into a trust is void — not voidable — under New York law.

He reminds us of a principle drilled into law students in their first year: courts may not reinterpret a statute unless they first find the statute ambiguous. New York’s Estates, Powers & Trusts Law § 7-2.4 is not ambiguous. It says plainly:

“If the trust is expressed in the instrument creating the estate of the trustee, every sale, conveyance or other act of the trustee in contravention of the trust … is void.”

Void means void. Not “voidable.”

Why This Matters in Foreclosure

In foreclosure cases, banks often argue that late transfers of loans into a REMIC trust can be ratified. Courts sometimes go along, treating such transfers as “voidable.” But under § 7-2.4, late transfers are absolutely void — they never happened.

• No purchase = no transfer. Assignments and powers of attorney are not proof of a transaction; they only create the illusion of one.

• Trusts that never paid for the loan never owned it. Without a purchase and acceptance within the cutoff period, there is nothing to ratify.

Supporting Case Law

• Powers v. Bergen (1852): The New York Court of Appeals held that a trustee’s act in violation of the trust instrument was void, even with legislative approval.

• Briggs v. Davis (1859): Unauthorized reconveyance by trustees deemed “absolutely void.”

• Genet v. Hunt (1889): Same conclusion — acts outside trust authority are void.

• Doman (2013) & Pepi (2000): New York’s Second Department reaffirmed that contraventions of trust terms are void.

• Firato v. Tuttle (1957, California): California’s high court agreed that New York’s identical statute meant void, not voidable, except when innocent purchasers were involved.

These rulings confirm that trustees acting outside the trust agreement — such as by accepting loans after the cutoff date — perform acts that are void ab initio.

The Practical Impact

• Standing evaporates: If the trust never owned the loan, neither it nor its trustee has standing to foreclose.

• Assignments are smoke and mirrors: Without a real-world transaction (payment, delivery, acceptance), assignments don’t cure the defect.

• Beneficiaries can’t fix it: Certificate holders are barred by the trust agreements from voting or challenging unauthorized acts.

Courts that treat late transfers as “voidable” are sidestepping clear statutory language. The legislative intent of § 7-2.4 is to protect beneficiaries from unauthorized trustee actions.

Bottom Line

Rod Ciferri’s analysis underscores a critical point: foreclosure cases often rest on acts that New York law deems void from the start. Lawyers and judges who ignore § 7-2.4 are rewriting unambiguous statutory language — something they are not permitted to do.

“Void” means void. And that single word could change the outcome of thousands of foreclosure cases.

⚖️ Note: This article is for educational purposes only. It is not legal advice. Always consult with a licensed attorney in your jurisdiction.

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