In a September 8, 2011 decision by Justice Emerson the court granted a mortgage holder summary judgment on its foreclosure claim and for the appointment of a referee. The claim arose from a $16 million real estate purchase, $8 million of which was originally contingent upon the purchaser receiving certain environmental and other approvals. The purchaser had the option to seek a reduction in the amount of the mortgage if the approvals were not received within three years of the closing. The parties later entered into a number of modification agreements which eliminated the purchaser’s right to a reduction of the mortgage but extended the loan’s maturity date. The last of these agreements extended the maturity date to January 6, 2011 and gave the purchaser the option of further extending the maturity date upon the payment of $400,000 by December 6, 2010.
The purchaser attempted to execute the option by sending the mortgage holder a $400,000 note on January 3, 2011. Plaintiff mortgage holder rejected the purchaser’s attempt to exercise the option and declared the loan due on its maturity date, January 6, 2011. The purchaser defaulted and the plaintiff mortgage holder commenced this foreclosure action and moved for summary judgment. The court granted the plaintiff summary judgment, rejecting the mortgage holder’s argument that it validly exercised the option, holding that strict compliance is required to validly exercise an option. The court also denied defendant’s motion for leave to amend its answer to assert fraud in the inducement and promissory estoppel because those defenses were unavailable to the defendant as a matter of law.
Sag Harbor Land, LLC v Sag Development Partners, LLC, Sup Ct, Suffolk County, September 8, 2011, Emerson, J, Index No. 2799-11.