Court rules borrower can’t hide behind mortgage gap it created
Veria’s first defense was jurisdictional. It argued RBL could not bring the case because it had never registered to do business in New York under Business Corporation Law Section 1312. That statute bars unregistered foreign corporations “doing business” in the state from filing lawsuits.
The court found RBL’s New York activity was too thin to trigger the rule. Its dealings were “occasional and sporadic” – nowhere near enough to qualify as doing business.
Then came the sharper argument.
Veria pointed to Banking Law Section 200, which requires a debt to be secured by a mortgage. RBL’s loan was unsecured. But the court identified a straightforward reason: under the Facility Agreement, the defendants were supposed to provide a “no objection certificate” that would have let the bank take mortgage security. They never delivered it.
The court’s conclusion was direct. Because the defendants caused the failure to secure the mortgage, they could not rely on that gap to block the lawsuit. You do not get to break the lock and then complain the door is open.
