Scott Mollen, Partner at Herrick, Feinstein LLP

Ground Lease—Lender Was Not Entitled To Redemption of Lease—Tenant Had Waived Right of Redemption—RPAPL §763

This decision involved the issue of whether the plaintiff lender could exercise a statutory right to redemption of a lease. The subject lease was a ground lease. The lender had provided a $30 million loan secured by a mortgage on the borrower's interest, as tenant, under the lease.

The lender sought a declaration "affirming its rights upon termination of the lease, including Landlord's obligation to provide a notice of termination under the lease and, upon lender's request within 60 days of such notice, a new lease on the same terms." The lender also sought a declaration as to its "separate statutory rights under Article 7 of the Real Property Actions and Proceedings Law to redeem the lease."

The landlord had moved for summary judgment declaring that the lender lacked a right to redeem the terminated leasehold interest pursuant to section 10.5 of the lease and RPAPL §763, "based on the waiver by the former tenant of such a right of redemption." The lender cross-moved to dismiss a counterclaim and defenses and also moved for summary judgment on its claim for a declaratory judgment declaring that the lender, as mortgagee of the leasehold interest, is entitled to exercise the statutory right of redemption pursuant to RPAPL §763.