Central Funding v. C.D. Kobsons Inc.

NEW YORK COUNTY
Real Property

New York Law Journal

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Justice Saliann Scarpulla

C.D. Kobsons Inc., which is the owner of the land and building at issue, borrowed $700,000 in a commercial loan from plaintiffs, in exchange for which Kobsons executed a promissory note and mortgage to plaintiffs encumbering the property. Plaintiffs later argued they established a prima facie entitlement to foreclosure against Kobsons, arguing Kobsons defaulted when it failed to pay the principal balance by the alleged maturity date of the mortgage. Kobsons claimed plaintiffs should not be entitled to summary judgment as they created the conditions of the default by wrongfully refusing to extend the maturity date for a second time, and for refusing to provide a $300,000 loan to Kobsons, as required under the Tenant Buyout Loan Agreement. The court found plaintiffs established a prima facie entitlement to foreclosure against Kobsons by producing evidence of the mortgage, the unpaid note, and Kobsons' default. It also found Kobsons failed to raise a triable issue of fact that plaintiffs created its default. The court noted, among other things, that Kobsons could not invoke its right to a loan under the Tenant Buyout Loan Agreement because it was a "condition precedent of any advances" that Kobsons was not in default on the mortgage.

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