40 Flatbush Realty Associates v. Howard Cortlandt Street, Inc. ( 1990 )

In an action to foreclose mortgages on real property, the defendants Howard Cortlandt St., Inc., and Manhattan Cortlandt Joint Venture separately appeal from an order of the Supreme Court, Kings County (Bernstein, J.), entered December 5, 1989, which granted the plaintiffs’ motion to approve a lease modification agreement.

Ordered that the order is affirmed, with one bill of costs payable to the respondents appearing separately and filing separate briefs.

The defendant Howard Cortlandt St., Inc. (hereinafter Cortlandt), is the record owner of premises located at 40 Flatbush Avenue in Brooklyn. Beginning in 1971, Cortlandt leased portions of the building to the defendant New York City Transit Authority. By the terms of the various lease agreements, the Transit Authority’s lease was to expire in 1998. The plaintiff 40 Flatbush Realty Associates is the current holder of a first mortgage on the subject premises. The plaintiff JSF Realty Associates is the current holder of second and fourth mortgages on the premises. Both plaintiffs acquired their mortgages by assignment from their predecessors in interest after Cortlandt defaulted on the mortgages.

Under the express terms of the first mortgage, as well as an assignment of leases, the first mortgagee was given the right to enter upon the mortgaged premises and lease any portion of the building, as well as to enforce, cancel, or modify any existing leases on the building upon the owner’s default. Accordingly, we agree with the Supreme Court that it was entirely proper for the plaintiffs and the Transit Authority to enter into an agreement modifying the Transit Authority’s lease. In addition, since the building was in need of substantial repairs, the modification agreement was commercially reasonable to preserve the value of the collateral. Thompson, J. P., Lawrence, Kunzeman and Rosenblatt, JJ., concur.