A five-year lease with a 13-month exit option wasn't enough to cure the trigger
A New York appellate court handed a commercial property owner a loss over a lease that looked like a fix but wasn't.
The Appellate Division, First Department, unanimously affirmed the dismissal of claims brought by KB Green Valley North, DST against KeyBank National Association and Wilmington Trust. At issue: a cash sweep provision in a commercial mortgage loan agreement, and whether a tenant's extended lease was enough to cure it.
The property owner entered into a loan with KeyBank in July 2022 for an office complex in Henderson, Nevada. KeyBank later assigned the loan to Wilmington Trust, as trustee of BBCMS Mortgage Trust 2022-C17.
One of the building's tenants, Greenspun Media Group, occupied about 25,000 square feet and was classified a "Primary Tenant" under the loan agreement. That designation came with a tripwire: if Greenspun failed to renew its lease within nine months of its June 30, 2023 expiration, the lender could initiate a cash sweep - meaning the property owner would have to funnel all revenue above operating expenses into a lender-controlled account.
Greenspun had not signed a lease extension by October 1, 2022. The lender pulled the trigger.
Two months later, the property owner came back with what it believed was the cure - an extended Greenspun lease for five years. But the lease gave Greenspun the option to reduce its space or walk away entirely, exercisable on the first day of the 13th month after execution. If exercised at the earliest date, Greenspun could be out by the end of month 13.
That exit clause proved fatal. The loan agreement required the primary tenant to renew "on terms reasonably satisfactory to Lender (but not for a term of less than five (5) years or for rent below the then market rental rate)." The court found this language unambiguous. The five-year minimum was a standalone requirement, not something the lender could waive under the broader "reasonably satisfactory" standard.
Because the extended lease did not "unequivocally bind" Greenspun for a full five-year term, the cure failed. The lender kept the sweep running.
Supreme Court, New York County had granted dismissal under CPLR 3211(a)(1), which allows a case to be thrown out when documentary evidence conclusively resolves the claim. The First Department affirmed unanimously on September 29, 2026.
For commercial mortgage originators and CMBS servicers, the case puts a fine point on lease-cure documentation: a tenant extension that nominally hits the required term but hands the tenant an early exit may not cure a cash sweep trigger at all.
