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Enforcing City-Imposed Covenants Against Successor Landowners

By Stewart E. Sterk
May 31, 2007

When the City of New York sells property subject to statutorily authorized conditions, what language in the deed is necessary to ensure that the conditions bind subsequent purchasers? That question confronted the Court of Appeals in 328 Owners Corp. v. 300 West 86 Oaks Corp. (NYLJ 4/4/07, p. 18, col. 1), in which the Court of Appeals held that successor purchasers were bound by deed language restricting the original purchaser to use of the property for rehabilitation or conservation of the existing building or construction of one to four unit dwellings.

Background

Article 16 of the General Municipal Law, known as the Urban Development Action Area Act (UDAAA), authorizes municipalities to sell municipally owned land in order to provide incentives for correction of blighted and deteriorated conditions. (General Municipal Law, sec. 691). Within New York City, property acquired by the city through tax foreclosure proceedings is land eligible for treatment as an Urban Development Action Area. (General Municipal Law, sec. 692(3)). Before the city may approve a proposal for designation of an Urban Development Action Area, the City Council must determine, inter alia, that 'the present status of the area tends to impair or arrest the sound growth and development of the municipality.' Generally, Urban Development Action Area Projects must proceed through ordinary land use review procedures, which in the City of New York, means the ULURP process. But the statute permits the City Council to waive ULURP review for specified projects: '[I]f the proposed urban development action area project consists solely of the rehabilitation or conservation of existing private or multiple dwellings or the construction of one to four unit dwellings without any change in land use permitted by local zoning, the governing body … may waive any such standards and procedures required by local law or charter.

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