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New York State Supreme Court Decision Continues Uncertainty as to Enforceability of Dual Collateral Real Estate Loans
Historically, New York has adopted the doctrine “against clogging” a borrower’s equitable right of redemption in mortgaged real property (the “Doctrine”). The Doctrine originated in English courts of equity to protect borrowers against forfeiture of their real estate when the mortgage contained language granting irrevocable title to the mortgagee upon the most minor default. The Doctrine denied lenders specific performance of such provisions and thus protected the borrower’s equitable right of redemption to buy back the property (in modern terms, the right to rescue the property from foreclosure by paying the indebtedness).