Category Archives: Mortgages

This was originally published on the SGR Blog.

Court Decides if Separate Envelopes Required for Each Borrower

A recent case raised a micro-cosmic issue of first impression before the Court: whether a plaintiff in a foreclosure action may satisfy the requirements of RPAPL 1304 by mailing a single 90-day notice jointly addressed to two or more borrowers.

Micro, because it required a deep dive into the minutia of foreclosure law. Cosmic, because a negative answer could be fatal to the suit.

This was originally posted on the SGR Blog.

Contracts for the sale of real property usually contain so-called “conditions precedent” to closing. Contracts sometimes contain, as such a condition, a lender’s consent to the assignment of an existing mortgage on the premises. And, as a recent case illustrates, the failure of that condition raises a broad panoply of legal issues, in general, and contract-specific disputes, in particular.

Prosperous View LLC agreed to purchase a condo unit at 170 Mercer Street in Manhattan from 170 Mercer LLC for $6.7 million and paid the down payment of $350,000 (to be held in escrow). Prosperous contended that the sale was contingent on Prosperous being assigned an existing mortgage on the property. It argued that it complied with its obligation to apply for the mortgagee’s consent to assume the mortgage. And alleged that the mortgagee began demanding onerous provisions in order for the assumption of the mortgage to be finalized, including an additional security payment of $1 million to be placed on deposit for the life of the loan. Prosperous contended that Mercer refused to pay the additional cost of complying with that condition.