Real Property Law

Easement By Necessity Exists to Use Neighbor's Parcel As Emergency Exit

Bennett v. 48 Laight Street Associates

NYLJ 3/17/04, p. 18, col. 1

Supreme Ct., N.Y. Cty

(York, J.)

In an action for a declaratory judgment that a landowner has an easement by necessity to use a neighbor's parcel as an emergency exit to the street, and for an injunction preventing interference with the easement, thelandowner sought a preliminary injunction and the neighbor sought summary judgment. The court granted the preliminary injunction, concluding that until alternate fire exists are constructed, the landowner enjoys an easement by necessity.

A single entity had owned the adjoining parcels currently owned by the landowner and the neighbor. The building now owned by the landowner had a fire ladder attached to the rear of the building that enabled tenants to reach the street through the parcel now owned by theneighbor. The neighbor is now constructing a building on his parcel, and the projected building will eliminate emergency access to the street by the tenants in the rear of landowner's building. The landowner brought this action to enjoin interference with its fire ladder and access to the street, contending that an easement by necessity arose when the single entity conveyed the two parcels to separate purchasers.

In granting a preliminary injunction, the court acknowledged that the landowner might construct other means to provide emergency access. In particular, the neighbor had argued that the landowner could provide wet-sprinkling and construct an independently enclosed hallway with a 1-hour resistance to fire. The neighbor's architect provided an alternative solution. Nevertheless, the court held that because those alternative means of exit do not currently exist, the landowner is likely to succeed on its easement-by-necessity claim. The court also noted that preservation of the easement was necessary to assure that the neighbor's property is not used in a way that causes harm to neighboring landowners. In balancing the hardship, the court noted that the neighbor would merely have to pare down its building plans, and held that the balance of hardship weighed in favor of the landowner.

COMMENT

An easement by necessity arises when three conditions are met: 1) the dominant and the servient estates were originally owned by a common grantor; 2) at the time of severance the dominant estate was making use of the servient estate; and 3) the dominant owner's use of the servient estate is 'reasonably necessary', in contrast to a mere convenience. By contrast to an easement by express grant or an easement by prescription, easements by necessity terminate when the necessity ends.

In determining whether a use qualifies as 'reasonably necessary,' courts focus on whether the dominant owner could cure the deficiency by means other than an easement. Where a landowner's property is landlocked and cannot be accessed without traversing a neighbor's property, the property is essentially useless without access and can only be cured by purchasing one of the neighboring properties. As a result, courts recognize an easement by necessity. (See Resk v. City of New York, 293 A.D.2d 661, where the court found that landowners who purchased landlocked land were entitled to an easement by necessity.) In cases other than landlocked land, courts have generally been willing to require landowners to pursue alternative remedies, even at significant expense, rejecting easement by necessity claims. For example, in Olin v. Kingsbury, 181 A.D. 348, one owner combined three buildings located on three lots to create a hotel. Some years later, one of the attached lots was sold and the purchaser sought rights in the adjoining lots by way of an easement by necessity. The court was unwilling to impose an easement notwithstanding that without use of the servient property the landowner had “no front entrance or hallway, no elevator or kitchen range, or kitchen chimney or heating plant or water supply or electric light.” The court reasoned that since the structure could be restored to its original state of independence, the requisite level of 'necessity' had not been reached. While recognizing that restoration might be costly, the court concluded that since the property could be put to reasonable use without an easement, the imposition of an easement was merely a convenience and not a necessity. (See also Pickett v. Whipple, 216 A.D.2d 833, where the court refused to impose an easement where a landowner relied on his neighbor's property for his water supply, since he could drill for water on his own property.)

In contrast to the high standards of 'necessity' exhibited in Olin and Picket, the court in Amalgamated Dwellings, Inc. v. Hillman Hous. Corp., 299 A.D.2d 199, like the court in Bennett, appeared to relax the necessity standard, focusing less on alternative mechanisms available to cure the deficiency.. In Amalgamated, the court held that a landowner's need to store the building's garbage for pickup constituted a sufficient necessity. While the opinion is unclear as to the availability of alternatives, presumably a substitute location could have been secured for the garbage storage.

Title Insurer Recovers from Seller When Sale Contract Made Tax Liens Seller's Responsibility

National Granite Title Insurance Agency, Inc. v. Cadlerock Properties Joint Venture, L.P.

NYLJ 3/5/04, p. 25, col. 3

AppDiv, Second Dept

(memorandum opinion)

In an action by a title insurer against a property seller for reimbursement of tax liens, the title insurer appealed from the Supreme Court's grant of summary judgment to the seller. The Appellate Division reversed and granted summary judgment to the title insurer, holding that the sale contract clearly made the liens seller's responsibility.

The sale contract between the seller and the purchaser provided for adjustment of real estate taxes prior to closing, and also provided that errors or omissions in computing closing adjustments would be corrected after closing. When the purchaser's title insurer learned, after closing, that the property was subject to tax liens, the title insurer paid the amount of those liens in accordance with the title insurance policy. The title insurer then brought this action against the seller to recover those liens as subrogee of the purchaser. The Supreme Court granted summary judgment to the seller.

In reversing and granting summary judgment to the title insurer, the court emphasized that the contract was unambiguous, and that the real estate tax liens were the sole obligation of the seller. The tax liens were omitted in computing closing adjustments, but the contract clearly contemplated correcting any such omissions. The Title insurer was subrogated to the purchaser's right to have seller pay for the outstanding liens. As a result, the title insurer was entitled to summary judgment.

City Entitled to Foreclose Mortgage for Default in Providing Documents

City of New York v. William L. Chisolm Housing Development Fund Corp.

NYLJ 3/31/04, p. 23, col. 3

Supreme Ct., Kings Cty

(Schack, J.)

In an action to foreclose a mortgage, the City of New York, as mortgagee, moved for summary judgment. The court granted the motion, holding that the mortgagor's failure to provide documents required by the mortgage agreement constituted default, entitling the city to foreclose.

In 1991, the city conveyed the subject property, a rehabilitated multiple dwelling, to mortgagor Chisolm, for a price of $1.00. At that time, however, Chisolm executed a mortgage to the city in a face amount of $2,120,400. As long as Chisolm complied with the terms of the mortgage, however, no monthly payments would become due, and, after 32 years, the note and mortgage would be canceled and no payment of principal would be due. The mortgage terms, however, required Chisolm to provide the city with annual audited financial statements, proposed budgets, management reports and rent rolls, together with other documents. When Chisolm stopped providing the required statements, the city made oral and written demands, followed by a 30-day notice to cure default. Chisolm never provided the city with these documents, prompting the instant foreclosure action.

In awarding the city summary judgment, the court noted that Chisolm had never contested its default. The court rejected Chisolm's argument that the tenants were necessary parties, noting that their tenancies were not subject to nor subordinate to the city's mortgage lien. The court also rejected Chisolm's argument that the city had failed to identify the covenants it had breached.

Federal Regulations Pre-Empt New York Statute Requiring Interest on Escrow Account

Flagg v. Yonkers Savings and Loan Association

NYLJ 3/24/04, p. 21, col. 1

U.S. Dist. Ct., SDNY

(Connor, J.).

In a class action by mortgagors seeking a declaration that federal regulations implemented pursuant to the Home Owners Loan Act (HOLA), 12 USC sec 1464(a), do not pre-empt New York law pertaining to interest on escrow accounts, the mortgagee bank moved for summary judgment. The court granted the bank's motion, holding that the federal regulations pre-empt state law.

Plaintiff class members entered into mortgage contracts with the bank, a federal savings and loan association, by the terms of which the bank would hold money in escrow to pay for taxes, insurance, and assessments. The agreement also provided that the bank would not pay interest on the escrow account unless the parties agreed to payment of interest, or the law required payment of interest. General Obligations Law, section 5-601, generally requires mortgagee banks to pay interest on escrow accounts in connection with mortgages on one-to-six family homes. At the same time, regulations enacted pursuant to HOLA purport to pre-empt state law on operation of savings and loan institutions. The regulations also provide that federal savings and loans could extend credit under federal law, without regard to state regulatory rules. The bank argued that these regulations established its right to summary judgment, because there was no agreement between the parties to pay interest, and in the absence of such an agreement, federal law would preclude payment of interest in the absence of an express agreement by the parties.

In awarding summary judgment to the bank, the court held that the regulations were intended to occupy the entire field of regulating investments by savings and loan associations. As a result, the court held that the bank was entitled to summary judgment.

Easement By Necessity Exists to Use Neighbor's Parcel As Emergency Exit

Bennett v. 48 Laight Street Associates

NYLJ 3/17/04, p. 18, col. 1

Supreme Ct., N.Y. Cty

(York, J.)

In an action for a declaratory judgment that a landowner has an easement by necessity to use a neighbor's parcel as an emergency exit to the street, and for an injunction preventing interference with the easement, thelandowner sought a preliminary injunction and the neighbor sought summary judgment. The court granted the preliminary injunction, concluding that until alternate fire exists are constructed, the landowner enjoys an easement by necessity.

A single entity had owned the adjoining parcels currently owned by the landowner and the neighbor. The building now owned by the landowner had a fire ladder attached to the rear of the building that enabled tenants to reach the street through the parcel now owned by theneighbor. The neighbor is now constructing a building on his parcel, and the projected building will eliminate emergency access to the street by the tenants in the rear of landowner's building. The landowner brought this action to enjoin interference with its fire ladder and access to the street, contending that an easement by necessity arose when the single entity conveyed the two parcels to separate purchasers.

In granting a preliminary injunction, the court acknowledged that the landowner might construct other means to provide emergency access. In particular, the neighbor had argued that the landowner could provide wet-sprinkling and construct an independently enclosed hallway with a 1-hour resistance to fire. The neighbor's architect provided an alternative solution. Nevertheless, the court held that because those alternative means of exit do not currently exist, the landowner is likely to succeed on its easement-by-necessity claim. The court also noted that preservation of the easement was necessary to assure that the neighbor's property is not used in a way that causes harm to neighboring landowners. In balancing the hardship, the court noted that the neighbor would merely have to pare down its building plans, and held that the balance of hardship weighed in favor of the landowner.

COMMENT

An easement by necessity arises when three conditions are met: 1) the dominant and the servient estates were originally owned by a common grantor; 2) at the time of severance the dominant estate was making use of the servient estate; and 3) the dominant owner's use of the servient estate is 'reasonably necessary', in contrast to a mere convenience. By contrast to an easement by express grant or an easement by prescription, easements by necessity terminate when the necessity ends.

In determining whether a use qualifies as 'reasonably necessary,' courts focus on whether the dominant owner could cure the deficiency by means other than an easement. Where a landowner's property is landlocked and cannot be accessed without traversing a neighbor's property, the property is essentially useless without access and can only be cured by purchasing one of the neighboring properties. As a result, courts recognize an easement by necessity. (See Resk v. City of New York, 293 A.D.2d 661, where the court found that landowners who purchased landlocked land were entitled to an easement by necessity.) In cases other than landlocked land, courts have generally been willing to require landowners to pursue alternative remedies, even at significant expense, rejecting easement by necessity claims. For example, in Olin v. Kingsbury, 181 A.D. 348, one owner combined three buildings located on three lots to create a hotel. Some years later, one of the attached lots was sold and the purchaser sought rights in the adjoining lots by way of an easement by necessity. The court was unwilling to impose an easement notwithstanding that without use of the servient property the landowner had “no front entrance or hallway, no elevator or kitchen range, or kitchen chimney or heating plant or water supply or electric light.” The court reasoned that since the structure could be restored to its original state of independence, the requisite level of 'necessity' had not been reached. While recognizing that restoration might be costly, the court concluded that since the property could be put to reasonable use without an easement, the imposition of an easement was merely a convenience and not a necessity. (See also Pickett v. Whipple, 216 A.D.2d 833, where the court refused to impose an easement where a landowner relied on his neighbor's property for his water supply, since he could drill for water on his own property.)

In contrast to the high standards of 'necessity' exhibited in Olin and Picket, the court in Amalgamated Dwellings, Inc. v. Hillman Hous. Corp., 299 A.D.2d 199, like the court in Bennett, appeared to relax the necessity standard, focusing less on alternative mechanisms available to cure the deficiency.. In Amalgamated, the court held that a landowner's need to store the building's garbage for pickup constituted a sufficient necessity. While the opinion is unclear as to the availability of alternatives, presumably a substitute location could have been secured for the garbage storage.

Title Insurer Recovers from Seller When Sale Contract Made Tax Liens Seller's Responsibility

National Granite Title Insurance Agency, Inc. v. Cadlerock Properties Joint Venture, L.P.

NYLJ 3/5/04, p. 25, col. 3

AppDiv, Second Dept

(memorandum opinion)

In an action by a title insurer against a property seller for reimbursement of tax liens, the title insurer appealed from the Supreme Court's grant of summary judgment to the seller. The Appellate Division reversed and granted summary judgment to the title insurer, holding that the sale contract clearly made the liens seller's responsibility.

The sale contract between the seller and the purchaser provided for adjustment of real estate taxes prior to closing, and also provided that errors or omissions in computing closing adjustments would be corrected after closing. When the purchaser's title insurer learned, after closing, that the property was subject to tax liens, the title insurer paid the amount of those liens in accordance with the title insurance policy. The title insurer then brought this action against the seller to recover those liens as subrogee of the purchaser. The Supreme Court granted summary judgment to the seller.

In reversing and granting summary judgment to the title insurer, the court emphasized that the contract was unambiguous, and that the real estate tax liens were the sole obligation of the seller. The tax liens were omitted in computing closing adjustments, but the contract clearly contemplated correcting any such omissions. The Title insurer was subrogated to the purchaser's right to have seller pay for the outstanding liens. As a result, the title insurer was entitled to summary judgment.

City Entitled to Foreclose Mortgage for Default in Providing Documents

City of New York v. William L. Chisolm Housing Development Fund Corp.

NYLJ 3/31/04, p. 23, col. 3

Supreme Ct., Kings Cty

(Schack, J.)

In an action to foreclose a mortgage, the City of New York, as mortgagee, moved for summary judgment. The court granted the motion, holding that the mortgagor's failure to provide documents required by the mortgage agreement constituted default, entitling the city to foreclose.

In 1991, the city conveyed the subject property, a rehabilitated multiple dwelling, to mortgagor Chisolm, for a price of $1.00. At that time, however, Chisolm executed a mortgage to the city in a face amount of $2,120,400. As long as Chisolm complied with the terms of the mortgage, however, no monthly payments would become due, and, after 32 years, the note and mortgage would be canceled and no payment of principal would be due. The mortgage terms, however, required Chisolm to provide the city with annual audited financial statements, proposed budgets, management reports and rent rolls, together with other documents. When Chisolm stopped providing the required statements, the city made oral and written demands, followed by a 30-day notice to cure default. Chisolm never provided the city with these documents, prompting the instant foreclosure action.

In awarding the city summary judgment, the court noted that Chisolm had never contested its default. The court rejected Chisolm's argument that the tenants were necessary parties, noting that their tenancies were not subject to nor subordinate to the city's mortgage lien. The court also rejected Chisolm's argument that the city had failed to identify the covenants it had breached.

Federal Regulations Pre-Empt New York Statute Requiring Interest on Escrow Account

Flagg v. Yonkers Savings and Loan Association

NYLJ 3/24/04, p. 21, col. 1

U.S. Dist. Ct., SDNY

(Connor, J.).

In a class action by mortgagors seeking a declaration that federal regulations implemented pursuant to the Home Owners Loan Act (HOLA), 12 USC sec 1464(a), do not pre-empt New York law pertaining to interest on escrow accounts, the mortgagee bank moved for summary judgment. The court granted the bank's motion, holding that the federal regulations pre-empt state law.

Plaintiff class members entered into mortgage contracts with the bank, a federal savings and loan association, by the terms of which the bank would hold money in escrow to pay for taxes, insurance, and assessments. The agreement also provided that the bank would not pay interest on the escrow account unless the parties agreed to payment of interest, or the law required payment of interest. General Obligations Law, section 5-601, generally requires mortgagee banks to pay interest on escrow accounts in connection with mortgages on one-to-six family homes. At the same time, regulations enacted pursuant to HOLA purport to pre-empt state law on operation of savings and loan institutions. The regulations also provide that federal savings and loans could extend credit under federal law, without regard to state regulatory rules. The bank argued that these regulations established its right to summary judgment, because there was no agreement between the parties to pay interest, and in the absence of such an agreement, federal law would preclude payment of interest in the absence of an express agreement by the parties.

In awarding summary judgment to the bank, the court held that the regulations were intended to occupy the entire field of regulating investments by savings and loan associations. As a result, the court held that the bank was entitled to summary judgment.