Legal Question in Real Estate Law in New York
Interpretation of mortgage maturity
I would just like to get another oppinion on when a mortgage I hold must be paid to me.
The mortgage and note read the following:
Witnesseth, that to secure the payment of an indebtness in the sum of Three Hundred twenty two thousand eight hundred dollers.
Lawful money of the united states,
the entire amount is due and payable on the later of: (a) a date six months after the conversion of the construction loan ( 580,000, bank info etc) to permenant loan, ie the conversion date, or (b) upon the refinance of the said 580,000 permanent loan/mortgage.
I was under the immpression that it meant whatever came first, Six months from the conversion of construction to permanent loan or a refinance but was told because that because the word ''Later'' is used it means that even if the six months expire it is not due unless he refinances. The only thing I have going for me is that he must use his ''best efforts'' to refinance. I was told to wait another month and start asking for proof that the are using their best efforts to refinance.
Any advise would be greatly appreciated...
--name removed--
3 Answers from Attorneys
Re: Interpretation of mortgage maturity
It is a poorly written document. I read it to be either 6 months after conversion of the construction loan OR upon refinance whenever that occurs.
I agree with the advice given to you. Attempt to gently push the mortgagor to refinance.
Mike.
Re: Interpretation of mortgage maturity
The use of the word "later" sets the criteria. If it is more than 6 months, get verification of his "good faith" efforts, which if not being met, will give you the right to proceed.
Re: Interpretation of mortgage maturity
You have problems. You need to engage counsel to address them (and I do not mean the lawyer who made this mistake). The mortgage, as written, is not due until both events occur. There are things you need to do to protect your interests, and you should be especially sure to get your hands on the building loan agreement (not the mortgage; the agreement is filed with the county clerk and not recorded; the good ladies at the information desk will be happy to help you find the agreement, and if it's not on file, there is a world of hurt coming). Normally, a construction loan is a short-term facility and it should be refinanced or paid out in a year or so after it closes. If it does not, then you have to take account of a possible foreclosure that could cut you off. And there are other things that go bump in the night.
This post is not legal advice and does not create an attorney-client relationship. It is a comment on the legal question posed by the poster and should not be relied upon unless and until an attorney-client relationship is entered into. Doing so would require signing an engagement letter and depositing a retainer to secure payment of legal fees.
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