A recent decision of the Kings County New York Supreme Court invalidated a 12-year old mortgage in foreclosure proceedings. When the Grace Christian Church hired Nelson Madden Black, the court had already granted summary judgment against it, enforcing a second mortgage given to a “hard money” lender. But with hard work and persistence, firm lawyers, led by partner Jonathan Nelson, persuaded the court to vacate the initial ruling, and grant summary judgment to the church invalidating the mortgage. Having initially neglected to obtain judicial approval of the mortgage, as the law required, the lender had asked the court to approve it nunc pro tunc. The court questioned whether the mortgage was fair at the time of its making, noting that the church’s congregation had never approved the borrowing, which had increased at the closing beyond the amount approved by the church trustees, and observing that the loan may have been “doomed to failure” if the church could not repay it when the balloon payment came due. Looking to the present day, the court concluded that it would not be in the best interest of the church to lose its house of worship from the foreclosure of the mortgage, and granted summary judgment dismissing the lender’s complaint. The case sends a cautionary message to lenders not to overreach when lending money to religious institutions, and to make doubly sure that the loan’s terms are fair, reasonable and in the borrower’s long-term best interests.
