Real Property Law

Association May Not Enforce Easement

Beachside Bungalow Preservation Association of Far Rockaway v. Oceanview Associates LLC

NYLJ 1/21/03, AppDiv, Second Dept

(memorandum opinion)

In an action to permanently enjoin interference with an alleged easement, an association representing dominant owners appealed from Supreme Court's grant of summary judgment to servient owner. The Appellate Division affirmed, because parties to the deed creating the easement did not own the land benefited by the easement.

Plaintiff association is a not-for-profit organization dedicated to preserving a bungalow community created in the 1920s in the Far Rockaway section of Queens. The community fronts on the Atlantic Ocean. In 1994, servient owner purchased five adjacent lots within the community. The lots purchased were those closest to the ocean, and servient owner built an apartment complex on those lots. The association objected, contending that the apartment building blocked a 40-foot-wide easement for beach access that had been granted to residents of the community in their respective deeds. When the association brought this action, Supreme Court granted summary judgment to servient owner, concluding that the association had raised no triable issues of fact supporting the existence of an easement.

In affirming, the Appellate Division addressed the association's contention that even if the original deed to servient owner's parcel did not include an easement, later deeds in servient owner's chain of title conveyed the property subject to a midblock easement of access to the beach. The court noted servient owners' contention that the language in those deeds resulted from a scrivener's error that was corrected by duly-recorded correction deeds. The court then noted, however, that even if those deeds had been intended to convey the disputed easement, they could not have done so effectively because the parties to a deed cannot create an easement in favor of a 'stranger to the deed.' Here, neither the supposed dominant owners nor their predecessors were parties to the disputed deeds. As a result, those deeds were ineffective to create an express easement in favor of the bungalow owners.

COMMENT

Due to this relative ease with which a property owner can convey an easement interest without violating the rule against easements in favor of 'a stranger to a deed,' the Court of Appeals, in Thomson v. Wade, 69 N.Y. 2d 570, found no reason 'to depart from the settled rule.' In particular, the court noted that a grantor can grant property rights to any party via an affirmative grant, so that 'any frustration [created by the 'stranger to the deed' rule] can readily be avoided by the direct conveyance of an easement of record from the grantor to the third party.'
The 'stranger to the deed' rule applies only to easements; it does not prevent a grantor from conferring on third parties the right to enforce restrictive covenants. Thus, in Nature Conservancy v. Congel, 253 AD2d 248, seller of land imposed a covenant, for the benefit of neighboring residential owners, that the land conveyed would remain in its natural state as a buffer zone between the residential area and a rock quarry. The court held that the neighboring residential owners were entitled to enjoin violation of the restrictive covenant even though they never had any ownership interest in the disputed land. The court, however, was careful to say that its decision applied only to restrictive covenants, sometimes also labeled negative easements, but did not apply to 'true' easements, by which the court meant affirmative easements.

RPL-274-a Does Not Prevent Mortgagee from Recovering Fee

Dougherty v. North Fork Bank

NYLJ 1/21/03, p. 27, col. 2

App Div, Second Dept

(memorandum opinion)

In an action by mortgagor of a condominium unit against mortgagee bank to recover fees paid in conjunction with satisfaction of the mortgage, both parties appealed from a Supreme Court order denying their respective summary judgment motions. The Appellate Division modified to grant summary judgment to mortgagee with respect to a fee for preparation of a satisfaction, and to grant summary judgment to mortgage with respect to other fees collected by mortgagee.

When mortgagor sold his condominium unit, his lawyer requested payoff statements from mortgagee bank. The bank sent the lawyer a 'Satisfaction Statement' which listed charges for a $5 'Facsimile Fee,' a $25 'Quote Fee,' and a $100 'Satisfaction Fee' for preparation of the satisfaction. Mortgagor paid the fees after sale of his condominium closed and then brought this action to recover the fees. Mortgagor also alleged that the action should be certified as a class action. Mortgagee bank moved for summary judgment dismissing the complaint, and mortgagor cross moved for summary judgment. Supreme Court denied both summary judgment motions, but granted mortgagor's motion to compel discovery.

In modifying, the Appellate Division relied on section 274-a to establish that mortgagor was entitled to recover the facsimile fee and quote fee. The court noted that the statute precludes a mortgagee from charging for providing mortgage-related documents. The court held, however, that the statute does not preclude mortgagee from charging an attorney's fee for preparation of the satisfaction of mortgage, and noted that in a rider to the mortgage, mortgagor had agreed to pay such a fee. The court held that Supreme Court had properly directed mortgagee bank to provide mortgagor with discovery before determining mortgagor's request for class action certification.

COMMENT

In 1993, Real Property Law ' 274-a was amended to include section 2, which states that '[t]he mortgagee shall not charge for providing the mortgage-related documents ' ' The statute sets forth an exclusive list which designates the mortgage-related documents as: 1) the abstract of title for the real property, 2) a payoff statement, and 3) a copy of the title insurance policy.
New York courts have construed the statute to prohibit charges not only for preparation of the documents but also for delivery. Thus, in Negrin v. Norwest Mortgage, Inc., 263 AD2d 39, a mortgagee bank charged the mortgagor a $10 fax fee, and the court reasoned that '[t]he words 'shall not charge' can only reasonably be read to prohibit any delivery fee, even by fax.'
Negrin went further, however, and suggested that a mortgagee cannot collect a fee for recording a satisfaction. The Negrin court emphasized that the statute was enacted to redress laxity by mortgagees in recording satisfactions. The issue in Negrin was made particularly easy because the bank had sought to recover a recording fee even thought it had not in fact recorded a satisfaction. Nevertheless, the Negrin court's approach contrasts sharply from the approach taken in Dougherty, where the court holds that the statute does not prohibit charges for preparation of documents not explicitly listed as 'mortgage-related.'

Purchaser Had Constructive Notice of Mortgage

Fairmont Funding, Ltd v. Stefansky

NYLJ 1/28/03, p. 22, col. 1, AppDiv, Second Dept

(memorandum opinion)

In mortgagee's foreclosure action, mortgagee appealed from Supreme Court's denial of its summary judgment motion with respect to purchaser from mortgagor. The Appellate Division reversed and granted summary judgment to mortgagee, holding that purchaser was on constructive notice of the mortgage, and hence bound by its terms.

As security for a loan made to Molly Stefansky, mortgagee took a mortgage secured by two parcels of land, including 1783 45th Street in Brooklyn. On August 7, 1990, mortgagee executed a release from the mortgage of the premises located at 1783 45th Street. The following day, Stefansky and mortgagee executed a consolidation and extension agreement (also called a 'spreader' agreement) whereby the mortgage was spread from the other parcel back onto the parcel located at 1783 45th Street. Both the spreader agreement and the release were recorded on September 6, 1990, but they were mistakenly recorded in reverse chronological order, so that the spreader agreement was indexed first, and the release was indexed afterward.  Later the parcel located at 1783 45th Street was subdivided, and on June 2, 1995, Stefansky conveyed one of the subdivided parcels to Bernat Kestenbaum. Kestenbaum's title searcher located the entries for the release and spreader agreements, and mistakenly concluded that the mortgage had first been consolidated and extended to continue the lien against other property, and then released against 1783 45th Street. The title searcher certified to Kestenbaum that the subject property was free from the mortgage. Kestenbaum then purchased the property. He later defaulted on the mortgage,
and mortgagee foreclosed, naming Kestenbaum as a defendant. Kestenbaum contended that he was a bona fide purchaser, and resisted mortgagee's summary judgment motion. Supreme Court denied summary judgment, concluding that Kestenbaum had raised questions of fact about whether he was a bona fide purchaser. Mortgagee appealed.

In reversing, the Appellate Division noted that a purchaser is presumed to have investigated every deed or instrument properly recorded, and to have known every fact to which an inquiry suggested by the record would have led. Here, a review of the recorded mortgage lien would have revealed that mortgagee's interest remained in effect at the time of Kestenbaum's purchase. Kestenbaum had constructive notice of the mortgage and had a duty to inquire whether it had been satisfied or released. As a result, Kestenbaum could not claim to be a bona fide purchaser, and mortgagee was entitled to summary judgment.

COMMENT

Real Property Law section 316 provides that the index forms part of the record of each recorded instrument. As a result, when improper indexing would make it impossible for a title searcher to locate a prior deed, a subsequent purchaser takes free of the interests created in that deed. Thus, in Federal National Mortgage Association v. Levine-Rodriguez, 153 Misc2d 8, the deed to Levine-Rodriguez was indexed under 'R' and the mortgage was indexed under 'L.' As a result, a title search did not retrieve the recorded mortgage. The court held that as a result of improper indexing, the mortgage lost priority to a subsequent, properly recorded, mortgage. The court emphasized that the party who presents the instrument for recording is in a better position to detect and correct indexing problems than is the subsequent purchaser who has no way to find the improperly indexed instrument. See also Coco v. Ranalletta, 189 Misc2d 535.

By contrast, when a competent title searcher would have discovered the deed despite the indexing error, the subsequent purchaser does not prevail over the parties relying on the improperly indexed instrument. For instance, in Astoria Federal S & L Assn v. June, 190 AD2d 644, the court held that subsequent purchasers took subject to a mortgage indexed under the wrong lot number because a properly-indexed deed made reference to the mortgage. Because a purchaser was on notice of the contents of the deed, a title search would have led to discovery of the mortgage.
In Fairmont, a title searcher would have discovered the disputed instruments, regardless of the recordation in reverse order. As a result, those instruments did provide record notice to subsequent purchasers.

Subsequent Notice of Pendency Discharged

Weiner v. Casey

NYLJ 2/5/03, p. 23, col. 6

Supreme Ct., Westchester Cty

(Lefkowitz, J.)

In contract vendee's action to annul the sale of real property to purchaser, purchaser moved to cancel the notice of pendency and to dismiss the complaint for failure to join the seller.  The court discharged the notice of pendency, but denied the motion to dismiss and directed contract vendee to join the seller.

On November 22, 1999, contract vendee contracted to purchase the subject property from seller. In 2000, purchaser brought an action against seller for breach and filed a notice of pendency. The court cancelled the notice of pendency for failure to commence the action properly.  Contract vendee then brought a second action for specific performance, adding two new defendants, and again filed a notice of pendency. The Appellate Division ultimately held that this notice of pendency should be dismissed because a party may not file successive notices of pendency against the same property and relating to the same controversy. Contract vendee then brought this action against purchaser, who had bought the property from seller in April 2002. Contract vendee filed a third notice of pendency. Purchaser moved to dismiss and to cancel the notice of pendency.

In cancelling the notice of pendency, the court concluded that even though the claims against purchaser are couched in language different from the language used in its pending complaint against seller, if contract vendee were successful in its claim on the complaint against purchaser to set aside the sale, that conclusion could only be reached because contract vendee was entitled to judgment against seller in its earlier specific performance action. As a result, the court concluded that the successive filings related to the same controversy, and that the filing against purchaser had to be canceled. The court did conclude, however, that the complaint should go forward, and that seller should be joined as a party.

COMMENT

CPLR section 6514 requires mandatory cancellation of a notice of pendency for untimely service of summons in the attached action, discontinued actions, and failure to commence or prosecute the action in good faith. As the filing of a lis pendens provides litigant with a powerful tool to encumber property without judicial review, NY courts have long held that failure to strictly comply with the statutory requirements bars successive notice of pendency filings. Thus, in Israelson v. Bradley, 308 N.Y. 511, the Court of Appeals cancelled a subsequent notice of pendency, after the original lis pendens had been cancelled when plaintiff failed to comply with the statutory requirements regarding timely service of process. Similarly, in Estate of Sakow v. Sakow, 97 N.Y.2d 436 the Court of Appeals refused to allow a new notice of pendency to be filed after plaintiff had failed to renew the previous lis pendens within its 3-year duration, as mandated by CPLR section 6513.
Although the Weiner court did note the well established exception permitting successive notices of pendency where the circumstances have shifted enough to give rise to a new cause of action, some courts ' unlike the court in Weiner ' have construed the exception to apply when the property is sold after cancellation of the first notice. Thus, in Bonded Concrete v. Johnson, 280 A.D.2d 758, the court held that lessee, who held a right of first refusal to purchase the subject property, was entitled to file a subsequent lis pendens after cancellation of the original notice of pendency and sale of the property to a third-party purchaser. The court held that the subsequent notice of pendency related to an entirely different cause of action that could not have existed at the time the original notice of pendency was filed: lessor's actual breach of lessee's first refusal purchase rights and  purchaser's tortious interference with that right.

Disclosure Statement Did Not Give Purchasers Claim Against Seller

Malach v. Chuang

NYLJ 1/10/03, p. 23, col. 1

Civil Ct., Richmond Cty

(Straniere, J.)

In an action by purchasers against sellers for damages resulting from alleged improper completion of a Property Condition Disclosure Statement, sellers moved to dismiss for failure to state a claim. The court dismissed, holding that article 14 of the Real Property Law did not give purchasers a claim when sellers had filled out the required statement, had indicated 'unknown' with regard to the allegedly defective conditions, and had no actual knowledge of the defects.

Before executing a contract of sale, sellers completed and signed a Property Condition Disclosure Statement required by Real Property Law section 462. The statutory form requires seller to answer yes, no, unknown, or NA to 48 separate questions. With respect to question 20, which asks whether there is rot or water damage to the structure or structures, sellers answered 'unknown.' After closing, purchasers discovered rot in the base of an above-ground pool on the premises. Purchasers then brought this action contending that sellers had improperly completed the disclosure statement, and that purchasers had relied on the statement in entering into the contract and taking title to the premises.

In dismissing the complaint, the court concluded that seller had properly completed the form, and that as a result, purchaser was not entitled to the $500 credit available when seller does not provide the form.  The court then held that the statute provides no other enforceable remedies to a purchaser.  The court concluded that other remedies contemplated by the statute were either void for vagueness or duplicative of other common law or statutory theories a purchaser might assert.  As a result, the court dismissed the complaint.

COMMENT

See article by Karl Hotzschue on page 1.

Association May Not Enforce Easement

Beachside Bungalow Preservation Association of Far Rockaway v. Oceanview Associates LLC

NYLJ 1/21/03, AppDiv, Second Dept

(memorandum opinion)

In an action to permanently enjoin interference with an alleged easement, an association representing dominant owners appealed from Supreme Court's grant of summary judgment to servient owner. The Appellate Division affirmed, because parties to the deed creating the easement did not own the land benefited by the easement.

Plaintiff association is a not-for-profit organization dedicated to preserving a bungalow community created in the 1920s in the Far Rockaway section of Queens. The community fronts on the Atlantic Ocean. In 1994, servient owner purchased five adjacent lots within the community. The lots purchased were those closest to the ocean, and servient owner built an apartment complex on those lots. The association objected, contending that the apartment building blocked a 40-foot-wide easement for beach access that had been granted to residents of the community in their respective deeds. When the association brought this action, Supreme Court granted summary judgment to servient owner, concluding that the association had raised no triable issues of fact supporting the existence of an easement.

In affirming, the Appellate Division addressed the association's contention that even if the original deed to servient owner's parcel did not include an easement, later deeds in servient owner's chain of title conveyed the property subject to a midblock easement of access to the beach. The court noted servient owners' contention that the language in those deeds resulted from a scrivener's error that was corrected by duly-recorded correction deeds. The court then noted, however, that even if those deeds had been intended to convey the disputed easement, they could not have done so effectively because the parties to a deed cannot create an easement in favor of a 'stranger to the deed.' Here, neither the supposed dominant owners nor their predecessors were parties to the disputed deeds. As a result, those deeds were ineffective to create an express easement in favor of the bungalow owners.

COMMENT

Due to this relative ease with which a property owner can convey an easement interest without violating the rule against easements in favor of 'a stranger to a deed,' the Court of Appeals, in Thomson v. Wade, 69 N.Y. 2d 570, found no reason 'to depart from the settled rule.' In particular, the court noted that a grantor can grant property rights to any party via an affirmative grant, so that 'any frustration [created by the 'stranger to the deed' rule] can readily be avoided by the direct conveyance of an easement of record from the grantor to the third party.'
The 'stranger to the deed' rule applies only to easements; it does not prevent a grantor from conferring on third parties the right to enforce restrictive covenants. Thus, in Nature Conservancy v. Congel, 253 AD2d 248, seller of land imposed a covenant, for the benefit of neighboring residential owners, that the land conveyed would remain in its natural state as a buffer zone between the residential area and a rock quarry. The court held that the neighboring residential owners were entitled to enjoin violation of the restrictive covenant even though they never had any ownership interest in the disputed land. The court, however, was careful to say that its decision applied only to restrictive covenants, sometimes also labeled negative easements, but did not apply to 'true' easements, by which the court meant affirmative easements.

RPL-274-a Does Not Prevent Mortgagee from Recovering Fee

Dougherty v. North Fork Bank

NYLJ 1/21/03, p. 27, col. 2

App Div, Second Dept

(memorandum opinion)

In an action by mortgagor of a condominium unit against mortgagee bank to recover fees paid in conjunction with satisfaction of the mortgage, both parties appealed from a Supreme Court order denying their respective summary judgment motions. The Appellate Division modified to grant summary judgment to mortgagee with respect to a fee for preparation of a satisfaction, and to grant summary judgment to mortgage with respect to other fees collected by mortgagee.

When mortgagor sold his condominium unit, his lawyer requested payoff statements from mortgagee bank. The bank sent the lawyer a 'Satisfaction Statement' which listed charges for a $5 'Facsimile Fee,' a $25 'Quote Fee,' and a $100 'Satisfaction Fee' for preparation of the satisfaction. Mortgagor paid the fees after sale of his condominium closed and then brought this action to recover the fees. Mortgagor also alleged that the action should be certified as a class action. Mortgagee bank moved for summary judgment dismissing the complaint, and mortgagor cross moved for summary judgment. Supreme Court denied both summary judgment motions, but granted mortgagor's motion to compel discovery.

In modifying, the Appellate Division relied on section 274-a to establish that mortgagor was entitled to recover the facsimile fee and quote fee. The court noted that the statute precludes a mortgagee from charging for providing mortgage-related documents. The court held, however, that the statute does not preclude mortgagee from charging an attorney's fee for preparation of the satisfaction of mortgage, and noted that in a rider to the mortgage, mortgagor had agreed to pay such a fee. The court held that Supreme Court had properly directed mortgagee bank to provide mortgagor with discovery before determining mortgagor's request for class action certification.

COMMENT

In 1993, Real Property Law ' 274-a was amended to include section 2, which states that '[t]he mortgagee shall not charge for providing the mortgage-related documents ' ' The statute sets forth an exclusive list which designates the mortgage-related documents as: 1) the abstract of title for the real property, 2) a payoff statement, and 3) a copy of the title insurance policy.
New York courts have construed the statute to prohibit charges not only for preparation of the documents but also for delivery. Thus, in Negrin v. Norwest Mortgage, Inc., 263 AD2d 39, a mortgagee bank charged the mortgagor a $10 fax fee, and the court reasoned that '[t]he words 'shall not charge' can only reasonably be read to prohibit any delivery fee, even by fax.'
Negrin went further, however, and suggested that a mortgagee cannot collect a fee for recording a satisfaction. The Negrin court emphasized that the statute was enacted to redress laxity by mortgagees in recording satisfactions. The issue in Negrin was made particularly easy because the bank had sought to recover a recording fee even thought it had not in fact recorded a satisfaction. Nevertheless, the Negrin court's approach contrasts sharply from the approach taken in Dougherty, where the court holds that the statute does not prohibit charges for preparation of documents not explicitly listed as 'mortgage-related.'

Purchaser Had Constructive Notice of Mortgage

Fairmont Funding, Ltd v. Stefansky

NYLJ 1/28/03, p. 22, col. 1, AppDiv, Second Dept

(memorandum opinion)

In mortgagee's foreclosure action, mortgagee appealed from Supreme Court's denial of its summary judgment motion with respect to purchaser from mortgagor. The Appellate Division reversed and granted summary judgment to mortgagee, holding that purchaser was on constructive notice of the mortgage, and hence bound by its terms.

As security for a loan made to Molly Stefansky, mortgagee took a mortgage secured by two parcels of land, including 1783 45th Street in Brooklyn. On August 7, 1990, mortgagee executed a release from the mortgage of the premises located at 1783 45th Street. The following day, Stefansky and mortgagee executed a consolidation and extension agreement (also called a 'spreader' agreement) whereby the mortgage was spread from the other parcel back onto the parcel located at 1783 45th Street. Both the spreader agreement and the release were recorded on September 6, 1990, but they were mistakenly recorded in reverse chronological order, so that the spreader agreement was indexed first, and the release was indexed afterward.  Later the parcel located at 1783 45th Street was subdivided, and on June 2, 1995, Stefansky conveyed one of the subdivided parcels to Bernat Kestenbaum. Kestenbaum's title searcher located the entries for the release and spreader agreements, and mistakenly concluded that the mortgage had first been consolidated and extended to continue the lien against other property, and then released against 1783 45th Street. The title searcher certified to Kestenbaum that the subject property was free from the mortgage. Kestenbaum then purchased the property. He later defaulted on the mortgage,
and mortgagee foreclosed, naming Kestenbaum as a defendant. Kestenbaum contended that he was a bona fide purchaser, and resisted mortgagee's summary judgment motion. Supreme Court denied summary judgment, concluding that Kestenbaum had raised questions of fact about whether he was a bona fide purchaser. Mortgagee appealed.

In reversing, the Appellate Division noted that a purchaser is presumed to have investigated every deed or instrument properly recorded, and to have known every fact to which an inquiry suggested by the record would have led. Here, a review of the recorded mortgage lien would have revealed that mortgagee's interest remained in effect at the time of Kestenbaum's purchase. Kestenbaum had constructive notice of the mortgage and had a duty to inquire whether it had been satisfied or released. As a result, Kestenbaum could not claim to be a bona fide purchaser, and mortgagee was entitled to summary judgment.

COMMENT

Real Property Law section 316 provides that the index forms part of the record of each recorded instrument. As a result, when improper indexing would make it impossible for a title searcher to locate a prior deed, a subsequent purchaser takes free of the interests created in that deed. Thus, in Federal National Mortgage Association v. Levine-Rodriguez, 153 Misc2d 8, the deed to Levine-Rodriguez was indexed under 'R' and the mortgage was indexed under 'L.' As a result, a title search did not retrieve the recorded mortgage. The court held that as a result of improper indexing, the mortgage lost priority to a subsequent, properly recorded, mortgage. The court emphasized that the party who presents the instrument for recording is in a better position to detect and correct indexing problems than is the subsequent purchaser who has no way to find the improperly indexed instrument. See also Coco v. Ranalletta, 189 Misc2d 535.

By contrast, when a competent title searcher would have discovered the deed despite the indexing error, the subsequent purchaser does not prevail over the parties relying on the improperly indexed instrument. For instance, in Astoria Federal S & L Assn v. June, 190 AD2d 644, the court held that subsequent purchasers took subject to a mortgage indexed under the wrong lot number because a properly-indexed deed made reference to the mortgage. Because a purchaser was on notice of the contents of the deed, a title search would have led to discovery of the mortgage.
In Fairmont, a title searcher would have discovered the disputed instruments, regardless of the recordation in reverse order. As a result, those instruments did provide record notice to subsequent purchasers.

Subsequent Notice of Pendency Discharged

Weiner v. Casey

NYLJ 2/5/03, p. 23, col. 6

Supreme Ct., Westchester Cty

(Lefkowitz, J.)

In contract vendee's action to annul the sale of real property to purchaser, purchaser moved to cancel the notice of pendency and to dismiss the complaint for failure to join the seller.  The court discharged the notice of pendency, but denied the motion to dismiss and directed contract vendee to join the seller.

On November 22, 1999, contract vendee contracted to purchase the subject property from seller. In 2000, purchaser brought an action against seller for breach and filed a notice of pendency. The court cancelled the notice of pendency for failure to commence the action properly.  Contract vendee then brought a second action for specific performance, adding two new defendants, and again filed a notice of pendency. The Appellate Division ultimately held that this notice of pendency should be dismissed because a party may not file successive notices of pendency against the same property and relating to the same controversy. Contract vendee then brought this action against purchaser, who had bought the property from seller in April 2002. Contract vendee filed a third notice of pendency. Purchaser moved to dismiss and to cancel the notice of pendency.

In cancelling the notice of pendency, the court concluded that even though the claims against purchaser are couched in language different from the language used in its pending complaint against seller, if contract vendee were successful in its claim on the complaint against purchaser to set aside the sale, that conclusion could only be reached because contract vendee was entitled to judgment against seller in its earlier specific performance action. As a result, the court concluded that the successive filings related to the same controversy, and that the filing against purchaser had to be canceled. The court did conclude, however, that the complaint should go forward, and that seller should be joined as a party.

COMMENT

CPLR section 6514 requires mandatory cancellation of a notice of pendency for untimely service of summons in the attached action, discontinued actions, and failure to commence or prosecute the action in good faith. As the filing of a lis pendens provides litigant with a powerful tool to encumber property without judicial review, NY courts have long held that failure to strictly comply with the statutory requirements bars successive notice of pendency filings. Thus, in Israelson v. Bradley, 308 N.Y. 511, the Court of Appeals cancelled a subsequent notice of pendency, after the original lis pendens had been cancelled when plaintiff failed to comply with the statutory requirements regarding timely service of process. Similarly, in Estate of Sakow v. Sakow, 97 N.Y.2d 436 the Court of Appeals refused to allow a new notice of pendency to be filed after plaintiff had failed to renew the previous lis pendens within its 3-year duration, as mandated by CPLR section 6513.
Although the Weiner court did note the well established exception permitting successive notices of pendency where the circumstances have shifted enough to give rise to a new cause of action, some courts ' unlike the court in Weiner ' have construed the exception to apply when the property is sold after cancellation of the first notice. Thus, in Bonded Concrete v. Johnson, 280 A.D.2d 758, the court held that lessee, who held a right of first refusal to purchase the subject property, was entitled to file a subsequent lis pendens after cancellation of the original notice of pendency and sale of the property to a third-party purchaser. The court held that the subsequent notice of pendency related to an entirely different cause of action that could not have existed at the time the original notice of pendency was filed: lessor's actual breach of lessee's first refusal purchase rights and  purchaser's tortious interference with that right.

Disclosure Statement Did Not Give Purchasers Claim Against Seller

Malach v. Chuang

NYLJ 1/10/03, p. 23, col. 1

Civil Ct., Richmond Cty

(Straniere, J.)

In an action by purchasers against sellers for damages resulting from alleged improper completion of a Property Condition Disclosure Statement, sellers moved to dismiss for failure to state a claim. The court dismissed, holding that article 14 of the Real Property Law did not give purchasers a claim when sellers had filled out the required statement, had indicated 'unknown' with regard to the allegedly defective conditions, and had no actual knowledge of the defects.

Before executing a contract of sale, sellers completed and signed a Property Condition Disclosure Statement required by Real Property Law section 462. The statutory form requires seller to answer yes, no, unknown, or NA to 48 separate questions. With respect to question 20, which asks whether there is rot or water damage to the structure or structures, sellers answered 'unknown.' After closing, purchasers discovered rot in the base of an above-ground pool on the premises. Purchasers then brought this action contending that sellers had improperly completed the disclosure statement, and that purchasers had relied on the statement in entering into the contract and taking title to the premises.

In dismissing the complaint, the court concluded that seller had properly completed the form, and that as a result, purchaser was not entitled to the $500 credit available when seller does not provide the form.  The court then held that the statute provides no other enforceable remedies to a purchaser.  The court concluded that other remedies contemplated by the statute were either void for vagueness or duplicative of other common law or statutory theories a purchaser might assert.  As a result, the court dismissed the complaint.

COMMENT

See article by Karl Hotzschue on page 1.