Under Special Circumstances, Court Orders Specific Performance of Construction Lender’s Obligations to Fund Advances Pursuant to Construction Loan Agreement

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In Destiny USA Holdings, LLC v. Citigroup Global Markets Realty Corp., the New York Supreme Court for Onondaga County held on July 17, 2009 that Citigroup Global Markets Realty Corp. (“Citigroup”), as lender and funding agent pursuant to a 2005 construction loan agreement, must make advances to Destiny USA Holdings, LLC (“Destiny”), the developer of a multi-use project adjacent to Carousel Center Mall in Syracuse, New York. In reaching this decision, the Court emphasized Citigroup?s dual role, the “unique” nature of the project, the clarity and unambiguity of the construction loan agreement, and the parties? prior course of dealing. Lenders and their lawyers should be aware of the implications of this decision in negotiating, drafting, performing under, working out, and exercising remedies pursuant to real estate loans.

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Published In: Civil Remedies Updates, General Business Updates, Construction Updates, Finance & Banking Updates, Residential Real Estate Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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