Termination Of Building Loan Agreement
i N.Y. Pfandrecht § 22.ii Id.; Parties to a construction loan agreement and those considering amending this agreement should speak to their attorney and title company regarding the consequences of filing a lending notice or amending it under section 73.iii MLF3 Airitan LLC v. 2338 Second Ave. Mazal LLC, 55 Misc.3d 241, 247, 45 N.Y.S.3d 759, 766 (N.Y. Sup. 2016).iv Id.v See id.vi Id. at 768.vii Id. (distinguished from Yankee Bank for Fin. &Sav., FSB v. Task Assoc., Inc., 731 F.Supp. 64 [N.D.N.Y.1990]); See also Howard Sav.
Bank v. Lefcon Partnership, 209 A.D.2d 473, 475, 618 N.Y.S.2d 910 (2d Dept.1994). Some examples of «non-essential» modifications to construction loans are the simple extension of the life span, the extension of the project completion date, and a lender`s decision to impose or not apply construction loans that do not apply to those available for improvements.v For example, in MLF3 Airitan LLC v. 2338 Second Ave. Mazal LLC, the New York Supreme Court, said a lender`s inability to enforce certain credit agreements is not considered a substantial change if «the construction loan agreement explicitly states that third parties have no claims against the lender or borrower.» vi The Court distinguished the facts of another case in which the construction savings contract expressly created rights over third parties and, therefore, the amendment affected the rights of third party beneficiaries.vii Some exceptions in the case-law may be open to judicial interpretation, but certain exceptions to the case-law may offer some comfort that lenders would need, to accept a modification of the construction loan in the context of COVID-19. In any event, parties to a construction credit agreement in New York should consult carefully with their lawyers and title companies to discuss the possibility of a change. . . .