The plaintiffs move for an order pursuant to CPLR §3212 dismissing defendants' counterclaim for failure to state an adequate cause of action, and that it is barred by unclean hands, pursuant to CPLR §6514(a) directing the Clerk of the County of Nassau to cancel the Notice of Pendency dated December 20, 2010 filed by defendants in the Office of the Clerk of the County of Nassau, granting plaintiffs summary judgment as and against the defendants, directing the stakeholder to release the sum of Thirty-Five Thousand and 00/100 Dollars, ($35,000.00), maintained in escrow to the plaintiffs. The plaintiffs submit a Memorandum of Law in support of the motion. The defendants submit opposition. The plaintiffs submit a reply affirmation. [*2]

The plaintiffs initiated this action sounding in breach of contract of sale of a one family dwelling located at 110 Alden Avenue, Valley Stream, New York, demanding the award of Thirty-Five Thousand and 00/100 Dollars, ($35,000.00), deposit monies held in escrow by the Stakeholder herein, attorney who represented the plaintiff for the sale. The defendants, by way of Verified Answer, counterclaimed for specific performance of the contract of sale. Plaintiffs served a reply to the counterclaim alleging the defense that the defendants were not ready, willing and able to close title for the purchase of the property and the defense of unclean hands.

The parties entered into a contract of sale for residential property which was contingent upon the defendants obtaining a mortgage of Two Hundred Eighty Thousand and 00/100 Dollars, ($280,000.00). The defendants provided a down payment of Thirty-Five Thousand and 00/100 Dollars, ($35,000.00), monies held in escrow by plaintiffs' attorney representing plaintiffs for the sale, the stakeholder herein. The defendants' mortgage application was denied. The defendants requested that the down payment be returned.

The subject Rider provides, under paragraph Nine (9), that the contract is subject to the purchaser obtaining a commitment from the lending institution for a first mortgage in the amount of Two Hundred Eighty Thousand and 00/100 Dollars, ($280,000.00), within forty-five (45) days, and the purchasers agree to make application for such mortgage financing within seven (7) days from the date that the purchasers receive a fully executed original of the contract. The purchasers, under paragraph 10(a), shall notify the attorney for the seller whether he has obtained the required commitment or has been unable to do so, and if the purchaser shall be unable, after diligent efforts to obtain said commitment, then either party, by written notice to the other may cancel the contract and down payment shall be fully refunded.

It is well established that a vendor is entitled to recover the entire amount of down payment, and is not limited to recovery of actual damages where purchasers defaulted on a real estate contract without lawful excuse. (Maxton Builders, Inc. v. Lo Galbo, 68 NY2d 373). Every contract implies good faith and fair dealing, and the promise will be implied if not found in the express terms of the contract. (Binks v. Farooq, 178 AD2d 999). The defendants were held in breach of their duty to act in good faith to secure a mortgage commitment entitling plaintiffs to recover money damages. (Id.) Plaintiffs made a prima facie showing of entitlement to summary judgment by showing that the defendants failed to promptly, and diligently, pursue a mortgage loan as required by the mortgage contingency provision of the parties' real estate contract. (HSM Real Estate, Inc. v. Khan, 71 AD3d 733). An agreement that provided plaintiff to obtain a firm mortgage commitment, within thirty (30) days of the execution of the agreement, required the plaintiff to make a "diligent application" to secure the commitment. (Levine v. Trattner, 130 AD2d 462). The plaintiff, in delaying to make application for a mortgage commitment, was found in breach of the contract, and therefore, not entitled to recover the down payment, despite the fact that the defendants resold the premises for a sum equal to the contract price. (Id., citing Maxton Builders v. Lo Galbo, supra; Lawrence v. Miller, 86 NY 131; and Silverstein v. United Cerebral Palsy, Assn., 17 AD2d 160).

Here, it is undisputed that the defendant, Edwin Silvey, did not apply for a mortgage, and [*3]only Barbara Silvey applied for a mortgage, which was denied. Barbara Silvey's application reveals her income as One Thousand Three Hundred and 00/100 Dollars, ($1,300.00), per month, in an application to obtain a mortgage loan that would amount to over Two Thousand and 00/100 Dollars, ($2,000.00) per month. The plaintiffs have made a prima facie showing of entitlement to summary judgment by showing that the defendants failed to make a diligent effort to secure a mortgage commitment, and failed to act in good faith to secure a mortgage commitment.

The defendants, in opposition, have failed to raise an issue of fact to warrant denial of this summary judgment motion. The defendants' assertion, and the affidavit submitted on behalf of defendants' mortgage broker, in opposition to the motion, that their mortgage broker, a non-party,

gave poor advice, and/or was distracted by family issues of his own, is unavailing in the action herein. The defendants' failure to apply for a mortgage loan, as defendant, Edwin Silvey, did not apply, is a breach of the clear and unambiguous mortgage contingency clause, and a breach of the contract. (HSM Real Estate, Inc. v. Khan, supra; and Levine v. Trattner, supra).

In light of the foregoing, the plaintiffs' motion is granted in its entirety.

It is hereby

ORDERED that the defendants' counterclaim is dismissed, and it is hereby further

ORDERED that Notice of Pendency is hereby cancelled, and it is hereby further

ORDERED that the stakeholder shall release the sum of Thirty-Five Thousand and 00/100 Dollars, ($35,000.00), to the plaintiffs within thirty (30) days of service of this order with notice of entry, and it is hereby further

ORDERED that the plaintiffs shall Settle Order on Notice whereby the order shall include all pertinent information relative to the filing of the Notice of Pendency.

E N T E R :

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J.S.C.

Dated: April 20, 2011