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CRE Insider Blog

Oral Contract To Extend Mortgage Not Enforceable

By Mike Berey on September 12, 2018

The notes secured by two mortgages, and a note secured by other collateral, afforded the borrower, Plaintiff Mosdot Shuva Israel (“MSI”), the opportunity between November 17, 2013 and January 31, 2014 to extend the maturity date for each note from their original maturity date of March 17, 2014 for five years. MSI alleged that in early 2013 it and Defendant Signature Bank’s Chairman and its Director of Real Estate, also Defendants, purportedly orally agreed to the terms of an early exercise of the option to extend the loans. The Defendants sent MSI a Term Sheet stating that they were “willing to consider [the] request to modify and extend” the loans if certain conditions were met and that “this letter is not a commitment by [the lender] or an agreement to approve the subject loan”. After MSI made payments on the loans, the Defendants allegedly orally stated that documents extending the loans would be sent for signature. MSI did not receive the loan documents and the loans were not extended.

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Topics: oral contract

Mezzanine Loan Held Not To Clog Equity Of Redemption

By Mike Berey on September 5, 2018

 

 

A loan for real estate projects in Kansas City and Cincinnati was secured by a mortgage on the land being developed and by the pledge of the membership interests in the borrower. The lenders commenced a UCC foreclosure sale of the membership interests.

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UCC-1 May Be Void If Trustee Of Trust Owning Cooperative Unit Applied Loan Proceeds For Non-Trust Debts

By Mike Berey on August 30, 2018

Plaintiff, the sole trustee of a trust which owned a cooperative unit, commenced an Action for a declaration that a Uniform Commercial Code Financing Statement filed against the unit as security for a loan to the Plaintiff, personally and in his capacity as trustee, was void and for a preliminary injunction enjoining the Defendant from foreclosing on the apartment. The Plaintiff submitted an affidavit in which he claimed that the loan proceeds were for his personal use.

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Topics: UCC

Purchaser Held Not Entitled To Rely On Judgment Amount As Docketed

By Mike Berey on August 23, 2018

In 2009, Defendant Paul Tauber (“Tauber”) obtained a judgment for $217,245 including interest of $16,050 and an amount for costs and disbursements. The judgment was mistakenly docketed by the Kings County Clerk in the amount of $16,050. The Plaintiff, which took title to the property in 2016 subject to the judgment, sought a judgment declaring that the judgment lien as against the property, be deemed to be for $16,050 and for injunctive relief against the judgment creditor and the Sheriff’s Office of the City of New York to enjoin a sale of the property following satisfaction of the alleged $16,050 lien.

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Parol Evidence To Be Applied To Determine Description Of Mortgaged Property

By Mike Berey on August 9, 2018

 

The note and the mortgage being foreclosed by JPMorgan Chase Bank, National Association (“Chase”) referred only to tax lot 48, but the metes and bounds description attached to the mortgage encompassed tax lots 48 and 49. A mortgage later executed to Defendant E.R. Holdings, LLC (“Holdings”) was recorded as a second lien against tax lot 48 and a first lien against tax lot 49. Holdings asserted affirmative defenses and a counterclaim seeking a judgment declaring that its mortgage was a valid first mortgage lien on tax lot 49. The Supreme Court, Queens County, denied Chase’s motion for summary judgment on the complaint insofar as asserted against Holdings; it also dismissed Holding’s affirmative defenses and counterclaims. The Court found “that the plaintiff failed to establish, prima facie, that it was the original parties’ intent that the [mortgage held by Chase] cover both lots”. The Appellate Division, Second Department, affirmed the lower court’s denial of the branches of the plaintiff’s motion that were for summary judgment on the complaint as asserted against Holdings. According to the Appellate Division,

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Topics: parol evidence

Auction Sale Purchaser Held Responsible For Unpaid Maintenance

By Mike Berey on July 31, 2018

 

The term of an auction sale of a cooperative unit for unpaid maintenance charges stated that “the winning bidder would be responsible for any maintenance arrears” and that the sale was “subject to ...any maintenance due at the Closing to the Co-op Corporation”. The Plaintiff, the assignee of the successful bidder, sought an Order annulling that provision requiring him to pay unpaid maintenance up to the date of sale, as well as maintenance and assessments that accrued while the sale was stayed when the prior holder of the cooperative interest contested the auction. The Uniform Commercial Code’s Section 9-615 (“Application of proceeds of disposition”) provides only that maintenance arrears are to be paid from the proceeds of sale after expenses of the sale are paid.

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Topics: auction

The New Economy And Commercial Real Estate: Short-Term Gains,  Long-Term Questions?

By Linda J. Isaacson on July 10, 2018

The good times for investors in U.S. commercial real estate continues, as the national economy is going through a rapid metamorphosis thanks to recent legislation and trade reforms. Over the long term, however, other trends may have significant impacts on individual sectors.

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Topics: Commercial Real Estate

Damages Awarded Under The Visual Artists Rights Act Of 1990 (“VARA”) When Developer Destroyed Art On Building Walls

By Mike Berey on June 7, 2018

 

 
Plaintiffs, 21 aerosol artists, sought a preliminary injunction preventing a real estate developer and four
of his companies from demolishing warehouse buildings in Long Island City, Queens County, on the
walls of which the Plaintiffs had painted works of art. The United States District Court for the Eastern
District of New York denied a preliminary injunction but, before a written opinion was issued, the
paintings were whitewashed over.
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Topics: Visual Artist Act

Deed-in-Lieu Of Foreclosure Held An Equitable Mortgage Reversed On Appeal

By Mike Berey on May 23, 2018

 

Under Real Property Law (“RPL”) Section 320 (“Certain deeds deemed mortgages”), “[a] deed conveying real property, which, by any other written instrument, appears to be intended only as a security in the nature of a mortgage, although an absolute conveyance in terms, must be considered a mortgage…” In In Re The First Union Baptist Church of the Bronx, the United States District Court for the Southern District of New York reversed a decision of a Bankruptcy Court Judge, reported at 572 B.R. 79 and at 2017 Bankr. LEXIS 2189, holding that a deed in lieu of foreclosure, recorded pursuant to the terms of a negotiated settlement agreement (the “Agreement”) approved by a different Bankruptcy Court Judge since then retired, violated Section 320, was an impermissible penalty, and was therefore void.

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Contract Held Not Illusory Or Unenforceable

By Mike Berey on May 3, 2018

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The purchase agreement between the Plaintiffs and the Defendant-Sponsor required the Defendant to set a closing date concurrently with or after certificates of occupancy were obtained for the building or the condominium unit intended to be acquired by the Purchaser. The agreement obligated the Defendant to use its best efforts to procure the certificates of occupancy within two years of the issuance of a temporary certificate of occupancy. When the agreement was entered into, the building was under construction. The Plaintiffs sought a return of their down-payment, alleging that the purchase agreement was void, illusory or unenforceable.

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Topics: Contracts