N.Y. Real Property Law § 271: Construction of covenants in mortgages on leases of real property and bonds or notes

§ 271. Construction of covenants in mortgages on leases of real

property and bonds or notes. In mortgages on leases of real property and

in bonds or notes secured thereby, the following or similar covenants or

agreements must be construed as follows:

1. In default of payment, mortgagee to have power to sell.--- A

covenant that the mortgagor "will pay the indebtedness, as provided in

the mortgage, and if default be made in the payment of any part thereof,

the mortgagee or obligee shall have power to sell the premises therein

described, according to law," must be construed as meaning that the

mortgagor or obligor shall well and truly pay unto the mortgagee or

obligee the said sum of money mentioned in the condition of the said

bond, note or obligation, and the interest thereon, according to the

condition of the said bond, note or obligation. And if default shall be

made in the payment of the said sum of money therein mentioned, or in

the interest which shall accrue thereon, or of any part of either, that

then and from thenceforth it shall be lawful for the said mortgagee or

obligee, his legal representative or assigns, to sell, transfer and set

over, all the rest, residue and remainder of the said term of years then

yet to come, and all other, the right, title and interest of the said

mortgagor or obligor of, in and to the same, at public auction,

according to the act in such case made and provided. And as the attorney

of the said mortgagor or obligor for that purpose by these presents duly

authorized, constituted and appointed, to make, seal, execute and

deliver to the purchaser or purchasers thereof, a good and sufficient

assignment, transfer or other conveyance in the law, for the said

premises, with the appurtenances; and out of the money arising from such

sale, to retain the principal and interest which shall then be due on

the said bond, note or obligation, together with the costs and charges

of advertisement and sale of the said premises, rendering the overplus

of the purchase-money (if any there shall be) unto the said mortgagor or

obligor, his legal representatives or assigns; which sale, so to be

made, shall forever be a perpetual bar, both in law and equity, against

the said mortgagor or obligor, and against all persons claiming or to

claim the premises or any part thereof, by, from or under him or them,

or any of them.

2. Mortgagor to keep buildings insured.--- A covenant "that the

mortgagor will keep the buildings on the said premises insured against

loss by fire, for the benefit of the mortgagee," must be construed as

meaning that the said mortgagor or obligor shall and will keep the

buildings erected and to be erected upon the lands above conveyed,

insured against loss and damage by fire, by insurance, and in an amount

approved by the said mortgagee or obligee and his assigns, and either

assign the policy and certificates thereof or have such insurance made

payable to the said mortgagee or obligee or his assigns, and in default

thereof it shall be lawful for the said mortgagee or obligee and his

assigns to effect such insurance, and the premium and premiums paid for

effecting the same shall be a lien on the said mortgaged premises, added

to the amount of the said bond, note or obligation, and secured by these

presents, and payable on demand, with legal interest.

3. Mortgagor to pay rent and charges on premises.--- A covenant that

the mortgagor "will pay the rent and other charges mentioned in and made

payable by said indenture of lease within ....... days after said rent

or charges are payable," must be construed as meaning that the said

mortgagor or obligor and his legal representatives and assigns, will pay

or cause to be paid, and discharge all rent and rents mentioned in and

made payable by the indenture of lease aforesaid, and also all taxes,

assessments or other charges that now are a lien, or hereafter shall or

may be levied, assessed or imposed and become a lien upon the premises

above described or any part thereof; and in default thereof, for the

space of ....... after such taxes or assessments or ....... after the

said rent or rents, or any of them shall have become due and payable by

the terms of said lease or by law, then and in each and every such case

the said mortgagee or obligee, his legal representatives or assigns may,

at option, and without notice, pay such rent or rents, taxes,

assessments or other charges and expenses, and the amount so paid, and

interest thereon, from the time of such payment, shall forthwith be due

and payable from the said mortgagor or obligor, his legal

representatives or assigns, to the said mortgagee or obligee, his legal

representatives or assigns, and shall be deemed to be secured by these

presents, and shall be collectable in the same manner, and at the same

time, and upon the same conditions as the interest then next maturing

upon the principal sum hereinbefore mentioned.

4. Agreement that whole sum shall become due.--- The words "And it is

hereby expressly agreed that the whole of the said principal sum shall

become due at the option of said mortgagee or obligee after default in

the payment of any instalment of principal or after default in the

payment of interest for ....... days, or after default in the payment of

any rent or other charge made payable by said indenture of lease for

......... days, or after default in the payment of any tax or assessment

for ....... days after notice and demand," must be construed as meaning

that should any default be made in the payment of any instalment of

principal or any part thereof, or of said interest or any part thereof,

or of any rent or other charge made payable by said indenture or lease,

on any day whereon the same is made payable, or should any tax or

assessment, which now is or may be hereafter imposed upon the premises

hereinafter described, become due and payable, and should the said

interest, rent or other charge aforesaid, remain unpaid and in arrear

for the space of ....... days, or such tax or assessment remain unpaid

and in arrear for ....... days after written notice by the mortgagee or

obligee, his executors, administrators or assigns, that such tax or

assessment is unpaid, and demand for the payment thereof, then and from

thenceforth, that is to say, after the lapse of either one of said

periods, as the case may be, the aforesaid principal sum, with all

arrearage of interest thereon, rent and other charges paid by the

mortgagee or obligee, shall, at the option of the said mortgagee or

obligee, his executors, administrators or assigns, become and be due and

payable immediately thereafter, although the period above limited for

the payment thereof may not then have expired, anything thereinbefore

contained to the contrary thereof in anywise notwithstanding.