Opinion
2008-1750 K C.
Decided on January 22, 2010.
Appeal from an order of the Civil Court of the City of New York, Kings County (Sylvia G. Ash, J.), dated October 11, 2006. The order granted defendants' motion for summary judgment dismissing the complaint and denied plaintiffs' cross motion for summary judgment.
ORDERED that the order is affirmed without costs.
PRESENT: PESCE, P.J., WESTON and RIOS, JJ.
This is an action for the return of a down payment of $19,000 in connection with the sale of a cooperative apartment. On October 5, 2005, the parties entered into a contract for the sale of said apartment. The contract contained a mortgage contingency clause requiring plaintiffs to diligently and in good faith apply to an institutional lender for a $152,000 mortgage. The contract also required plaintiffs to apply to more than one institutional lender. Plaintiffs obtained a conditional mortgage commitment letter for $152,000 from J.P. Morgan Chase Bank, dated October 21, 2005, which incorporated, among other things, a list of conditions which had to be satisfied at least five business days prior to the closing, including a satisfactory appraisal. An appraisal conducted on November 28, 2005 determined that the appraised value of the cooperative apartment was $169,000, significantly less than the $190,000 purchase price. Plaintiffs claimed that they did not learn until January 18, 2006, when they were provided with the appraisal report, that their mortgage application had been denied based upon insufficient collateral; that they immediately notified the sellers on that date that they had been unable to procure financing; and that, on January 24, 2006, they made a written demand for the return of their down payment, which defendants refused to return. Defendants generally denied the allegations of the complaint, set forth various affirmative defenses, and interposed a counterclaim alleging, among other things, that plaintiffs had breached the financing provisions of the contract by not applying to more than one institutional lender. Thereafter, defendants moved for summary judgment dismissing the complaint and plaintiffs cross-moved for summary judgment. The Civil Court granted defendants' motion, directing that the $19,000 deposit be taken out of escrow and awarded to defendants as damages, and dismissed plaintiffs' cross motion. The instant appeal by plaintiffs ensued.
When a condition of a mortgage loan commitment is not fulfilled through no fault of the purchaser, the purchaser's performance is excused, so long as he or she acted in good faith ( see Kapur v Stiefel, 264 AD2d 602; Lunning v 10 Bleecker St. Owners Corp., 160 AD2d 178). Purchasers who exert "a genuine effort to secure . . . mortgage financing . . . in good faith . . . are entitled to rely on the contract and may recover their down payment if the mortgage is not, in fact, approved" ( Cone v Daus, 120 AD2d 788, 790). A good faith performance may be satisfied as a matter of law by a purchaser's mortgage application to a single bank, if that is all that the contract requires ( see e.g. Ruggeri v Brenner, 186 AD2d 441).
While it is true that plaintiffs' failure to obtain approval of financing was through no fault of their own, in that the bank to which plaintiffs applied would not issue a firm mortgage commitment because the appraised value of the premises was inadequate, plaintiffs did not demonstrate that they had made a good faith effort to obtain financing, since the contract required them to apply to more than one institutional lender, a requirement with which they apparently did not comply ( see Allen v Smith, 124 AD2d 916; cf. Macho Assets v Spring Corp., 128 AD2d 680; Cohen v Turnpike Dev. Corp., 27 Misc 2d 1027).
As plaintiffs were in breach of the contract provisions, they were not entitled to a return of their down payment ( see Maxton Bldrs. v Lo Galbo, 68 NY2d 373). Accordingly, there is no basis for this court to disturb the Civil Court's order awarding summary judgment in favor of defendants.
Pesce, P.J., Weston and Rios, JJ., concur.