I don't think you are confused. I think you know that in NY small claims court, the defendant has to live within the jurisdiction of the court in order for you to sue in that court. Legal residence is a complex term but I would say that the place the person sleeps at night is the legal residence for determining which small claims court to sue in. If the other house is an investment property, I don't think its a basis for jurisdiction. If its a second home that is used on a regular basis (i.e. weekends), you would have an argument that it too gives jurisdiction.
I am a former federal and State prosecutor and now handle criminal defense and personal injury/civil rights cases. Feel free to check out my web site and contact me at (212) 385-8015 or via email at Eric@RothsteinLawNY.com. The above answer is for informational purposes only and not meant as legal advice.
You're confusing venue, where you sue someone, and where you can get them served with the complaint.
Venue is where a defendant lives, or if it's a contract case, where the contract was entered into, or where it was supposed to be performed. If it's a car accident case, it's where the accident happened.
For service, you send a sheriff to serve them wherever you know they actually are -- work, home, etc.
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It is hard to do w/out asking him lots of questions Since you're not sure, you can try to use the one that helps you & she if he objects. If not, your question is moot. If he does object you can fight the issue & let a Judge decide.
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Don't stress over this. It is small claims. Sue where he owns the house, so you can collect if you win. That is where the money is. If he defaults you have a judgment. If he shows up, then no court will care where he was served. He would be there, due to the notice.