Summary
In 2550 Olinville Ave., Inc. v Crotty (185 AD2d 200 [1st Dept 1992]), the Court held that, absent a waiver by the housing company of the 20-year period provided for in PHFL § 35 (2), or a provision in the housing company's mortgage directly inconsistent with PHFL § 35 (2), HPD must issue a Letter upon the payment of the remaining balance and current interest on the mortgage.
Summary of this case from In re 1520 Sedgwick Tenant Ass'n v. DonovanOpinion
July 23, 1992
Appeal from the Supreme Court, New York County (Herman Cahn, J.).
Plaintiffs are private housing companies which participated in the Mitchell-Lama program subsequent to May 1, 1959. In connection therewith, they obtained low-interest mortgages from the municipal authorities and then attempted to prepay these first mortgages and dissolve as a limited-profit housing company pursuant to Private Housing Finance Law § 35 (2). The City agency in charge of supervising the Mitchell-Lama program, through its Deputy Commissioner, originally agreed to terms concerning the prepayment of these mortgages and the subsequent dissolution of the housing companies. However, it was later determined by defendant HPD that the mortgage prepayment would not be permitted in order to give the agency an opportunity to develop rules and regulations concerning same. The plaintiffs herein commenced action to compel HPD to accept prepayment of the mortgages and for breach of contract seeking damages as a result of the wrongful refusal to accept prepayment.
The municipal defendants eventually did accept the prepayment and thus all that remain are the causes of action seeking damages for breach of contract. We hold that the IAS court properly granted summary judgment to plaintiffs Leland and Kingsbridge because their mortgage notes contained nothing directly inconsistent with the provision of Private Housing Finance Law § 35 (2) allowing dissolution as a limited profit housing company after 20 years without consent of the municipal defendants or supervising agency, upon the payment in full of the remaining balance of principal and current interest on the mortgages (see, Matter of Columbus Park Corp. v Department of Hous. Preservation Dev., 170 A.D.2d 145). However, since plaintiff Olinville's prepayment clause contained a specific condition precedent to the exercise of this right, namely, payment of a HUD first mortgage, the municipal defendants had a right to require this action prior to dissolution under Private Housing Finance Law § 35 (2). Nor is estoppel available against a governmental entity (see, Scruggs-Leftwich v Rivercross Tenants' Corp., 70 N.Y.2d 849, 852).
Concur — Murphy, P.J., Sullivan, Rosenberger, Wallach and Rubin, JJ.