A New York court has denied a request for a preliminary injunction that would have prevented the sale of a townhouse owned by 12 E 72nd LLC, affecting the Croman family who reside there. The ruling comes after the company defaulted on a $31 million loan secured by the property. The decision, issued on May 22, 2026, by Judge Gerald Lebovits, highlights the complexities of real estate financing and the rights of homeowners in foreclosure situations.
The case, titled 12 E 72nd LLC v. NYC Multifamily Portfolio LLC (Index No. 656206/2025), centers around a loan taken out by 12 E 72nd LLC, which is co-owned by Steven and Harriet Croman. They live in the townhouse located at 12 East 72nd Street in Manhattan. After defaulting on the loan, the lender sought to foreclose on the ownership interests pledged as collateral, prompting the Cromans to file for injunctive relief against the sale.
The dispute began when 12 E 72nd LLC secured a loan of $31 million, using the townhouse as collateral. When the company defaulted, the lender attempted to foreclose on the pledged ownership interests, which would effectively transfer control of the property from the Cromans to the lender. In response, the Cromans sought a preliminary injunction to halt the sale, arguing that it would cause irreparable harm since they reside in the townhouse.
The case reached the New York Supreme Court after the Cromans filed for an injunction to stop the foreclosure process. They claimed that the lender’s actions would lead to them losing their home, which they argued constituted irreparable harm. The court had previously granted a temporary restraining order, allowing for a brief pause in the proceedings as the case was reviewed.
In the ruling, Judge Lebovits determined that the Cromans were not entitled to the preliminary injunction they sought. The court stated, "Although any future sale of the pledged ownership interests must be made on 120 days' notice in compliance with the UCC and the pledge agreements, plaintiffs are not entitled to preliminary injunctive relief." This decision indicates that while the Cromans may have a valid concern regarding their home, the legal framework governing the foreclosure process does not currently favor their request for immediate relief.
The court's opinion outlined several key points in its decision-making process. First, it highlighted that the plaintiffs had not demonstrated a likelihood of success on the merits of their case. Specifically, the court noted that the lender had the right to foreclose on the pledged ownership interests, and the Cromans' arguments regarding the lender's standing were not sufficient to warrant the injunction.
Additionally, the court addressed the issue of irreparable harm. While the Cromans argued that losing their home would cause them irreparable injury, the court found that their ownership interest was not unique in a way that could not be compensated with monetary damages. Judge Lebovits referenced previous cases where courts had denied similar motions for injunctive relief, emphasizing that the nature of the property or ownership interest is crucial in determining whether irreparable harm exists.
Furthermore, the court noted that the Cromans had not shown that the lender's actions were commercially unreasonable or that the notice of the foreclosure sale was invalid. The court found that the lender had complied with the necessary legal requirements, and any defects in the notice could be rectified in future proceedings.
This ruling has significant implications for the Croman family and others in similar situations. It underscores the challenges faced by homeowners who default on loans secured by their properties. The court's decision reinforces the principle that lenders have the right to pursue foreclosure actions under the Uniform Commercial Code (UCC) when borrowers default, even if the property in question is a family home.
Looking ahead, the Cromans may still pursue other legal avenues, including appealing the court's decision. However, the ruling sets a precedent that may complicate their efforts to regain control over their townhouse. The court has also ordered that NYC SFR Portfolio LLC, the actual lender, be joined as a party to the action, which could further complicate the proceedings.
As the case progresses, it will be essential to monitor any developments, particularly regarding the potential for an appeal or additional motions filed by the Cromans. The outcome of this case could impact not only the Croman family's future but also the broader landscape of real estate financing and homeowner rights in New York.