Eminent Domain - Award - Town Acquired Title to Country Club - Bank's Mortgage Lien Extinguished by Taking of Property, and Replaced with Equitable Lien on Proceeds of Condemnation Award - Bank Entitled to Principal, Interest, Late Fees, and Deferred Interest But Not Prepayment Fee and Legal Fees - Mortgage Provision for Prepayment Premium Relating to Acceleration of Loan Inapplicable

Liens - Equitable Lien - Mortgage Loan on Property Held by Bank - Proceeds of Condemnation Award to Satisfy All Liens on Property

In a condemnation proceeding, TD Bank, National Association, appeals from an order of the Supreme Court, Westchester County (Bruce E. Tolbert, J.), dated June 2, 2020. The order, insofar as appealed from, in effect, granted that branch of the motion of Willow Ridge Country Club, Inc., which was pursuant to EDPL 505 (C) for a determination that it is not required to pay TD Bank, National Association, a prepayment fee and legal fees from the proceeds of a condemnation award.

Ordered that the order is affirmed insofar as appealed from, with costs.

The Town of Harrison commenced this proceeding to acquire title by eminent domain to certain real property known as the Willow Ridge Country Club and owned by Willow Ridge Country Club, Inc. (hereinafter Willow Ridge). The Supreme Court granted the petition and directed the Town to make an advance payment in the sum of $13,650,000 to Willow Ridge, with instructions to use the proceeds to satisfy all liens on the property, including an equitable lien arising out of a mortgage loan on the property held by TD Bank, National Association (hereinafter TD Bank). TD Bank was paid the sum of $7,348,111.11, an amount that included principal, interest, late fees, and deferred interest, but did not include, as requested by TD Bank, a prepayment fee in the sum of $709,672.41 and legal fees in the sum of $6,500.

Thereafter, Willow Ridge moved, inter alia, pursuant to EDPL 505 (C) for a determination that it is not required to pay TD Bank the prepayment fee and legal fees from the proceeds of the condemnation award. In an order dated June 2, 2020, the Supreme Court, among other things, in effect, granted that branch of the motion. TD Bank appeals.

TD Bank's mortgage lien was extinguished by the taking of the property by eminent domain, and substituted in its place was an equitable lien on the proceeds of the condemnation award (see Matter of County of Nassau [Gelb—Siegel], 24 NY2d 621, 626 [1969]; Copp v Sands Point Mar., 17 NY2d 291, 293 [1966]). The Town's appropriation of the property securing the mortgage, rather than TD Bank's acceleration of the mortgage loan, in effect, accelerated the mortgage payment (see Silverman [*2]v State of New York, 48 AD2d 413, 414 [1975]). Contrary to TD Bank's contention, although the mortgage loan documents provided for a prepayment premium relating to an acceleration of the loan, such provision is inapplicable. Notably, section 1.16 (f) of the mortgage agreement provided that "[i]n the event any insurance proceeds or condemnation awards are applied by the Mortgagee to reduce the outstanding principal balance of a Note, said payments shall be applied against the outstanding principal balance in the inverse of maturity, without penalty or premium." Accordingly, the Supreme Court properly determined that TD Bank was not entitled to the prepayment fee and legal fees (see Matter of D.I.S. LLC, v Sagos, 38 AD3d 543, 544 [2007]; Silverman v State of New York, 48 AD2d at 414). Duffy, J.P., Miller, Taylor and Hom, JJ., concur.