Real Property Law

Protruding Fire Escape Does Not Establish Adverse Possession

136 West 46th Street v. Extell West 45th Street LLC

NYLJ 7/31/08, p. 26, col. 1

Supreme Ct., N.Y. Cty

(Shafer, J.)

In an action by a building owner to establish title by adverse possession, neighboring true owner moved for summary judgment.
The court granted true owner's motion, holding that a protruding fire escape and exhaust duct could not establish title by adverse possession.

True owner is developing a 52-story hotel on midtown Manhattan land previously operated as a parking lot. During the time the land was used as a parking lot, neighboring building owner built and maintained appendages, including a fire escape and an exhaust duct. The exhaust duct is low enough to the ground that a person standing on true owner's land has to “duck” to avoid it, and only cars, not trucks, could be parked under the duct. The fire escape, which protrudes from the second floor of the building, extends 21 inches into true owner's air space. When true owner asked neighbor to remove the appendages, neighbor brought this action. True owner sought summary judgment.

In granting true owner's summary judgment motion, the court held that an encroacher may not assert title by adverse possession to air space occupied by the encroachment. The court also noted that in the absence of any enclosure or cultivation, the building owner could not establish either actual possession or hostility.

EDC's Right of Entry Held Enforceable

New York City Economic Development Corp. v. Corn Exchange, LLC

NYLJ 7/30/08, p. 27, col. 3

Supreme Ct., N.Y. Cty

(Gische, J.)

In an action by the Economic Development Corporation to obtain title to premises it had previously conveyed, transferee moved to dismiss for failure to state a claim. The court denied defendant's motion, holding that when the EDC transferred the land, it retained an enforceable right of entry.

In 2003, the EDC conveyed the subject building to transferee, and transferee committed to rehabilitate the building and to establish a non-profit culinary institute in part of the building. Transferee was required to complete the changes and to obtain a certificate of occupancy within three years of the date of the deed, and the deed also provided that if transferee did not fulfill its obligations, the EDC reserved “the right to re-enter and take possession of the premises …, and the estate conveyed hereby to [transferee] shall thereupon terminate, and fee simple title to the premises … shall revest in [the EDC]…” When transferee did not complete the work within the time specified, the EDC brought this action to obtain title to the land under this deed provision. Transferee moved to dismiss, contending first that the deed provision created only a covenant, not a condition subsequent creating a right of entry, and second, that even if the deed did purport to create a right of entry, the right was unenforceable.

In denying transferee's motion, the court first held that the clear language of the deed was designed to create a right of entry, enforceable by forfeiture, not a covenant, which would be enforceable only by specific performance or money damages. The court then turned to transferee's argument that RPAPL section 1953(4) prevents enforcement of a right of entry when the condition subsequent is created in a devise for public or religious purposes. The court noted that section 1953 generally prevents self-help to exercise a right of entry, and requires instead a judicial proceeding. Section 4, by providing that “this section shall not apply” when the condition subsequent is created for public purposes simply preserved the common law rule in those cases, which would have permitted the grantor to exercise the right of entry without a judicial proceeding. The court rejected the argument that section 4 was designed instead to prevent all enforcement of the right of entry in cases where the right of entry is reserved in a deed designed for public or religious purposes.

COMMENT

Although RPAPL section 1953(2) requires that a court proceeding be brought to enforce a right of entry or reverter for non-performance of a condition subsequent, subsection (4) provides that “[t]his section shall not apply '” to conveyances that restrict land use to public, charitable, educational, or religious purposes. At common law, self-help was available to assert a possessory right for failure to fulfill a condition relative to land use. Section 1953 and its predecessor statute established a requirement that a court proceeding be brought to enforce a right of entry, and also permitted courts to refuse enforcement if the interest to be protected were not substantial. See RPAPL section 1953(3); NYLS Governor's Bill Jacket, L1958 C864. Corn Exchange construed subsection (4)'s exclusion for charitable conveyances, as an exclusion from the requirement that a court proceeding be brought, permitting the self-help that was available at common law, rather than as a provision denying a right of entry entirely when the restriction is for charitable purposes. Since '1953 simply adds to the common law a requirement of a court proceeding, any exclusion from the scope of the statute is an exclusion from this requirement. Exercise of a right of entry had been available prior to the statute's enactment.

Corn Exchange's construction of '1953 is supported by DiPietro v. County of Westchester, 237 AD2d 325, a Second Department case involving a reverter. In DiPietro, the defendant County of Westchester (“the County”) conveyed property to the defendant City of New Rochelle (“the City”) by deed providing that the property was to be used solely for park and recreation purposes, and in the event that it was put to any other use, or was not put to park and recreation purposes use within five years, the land would revert to the County. The City never put the premises to park or recreation use and after five years had passed, conveyed to property to the plaintiff, DiPietro, without seeking the County's consent. In DiPietro's declaratory judgment action, the court held that section 1953 permits an automatic reverter in cases of conveyances for public use. Accordingly, title to the property reverted to the County five years after its conveyance to the City. Although Corn Exchange involves a right of entry and not a reverter, section 1953 treats the interests identically.

Corn Exchange also noted that while conditions subsequent are generally disfavored because they impinge upon the alienation of an estate, the express language in the deed, which provided that if the defendant failed to use the premises in the manner required, then the plaintiff had the right to “re-enter and re-acquire” the premises, made it clear that the parties intended to create a condition subsequent and not a covenant, thereby triggering the application of '1953 and permitting exercise of a right of entry. The Court of Appeals has indicated that “[w]hile an express reentry reservation is not essential, it is well established that inclusion of such a right is one of the clearest and strongest manifestations supporting a finding of intent to create a future interest on a condition subsequent.” Suffolk Business Center, Inc v. Applied Digital Data Systems, Inc., 78 NY2d 383, 388-389 [quotations omitted] quoting Munro v. Syracuse, Lake Shore & N. R. R. Co., 200 NY 224, 231.

TILA and RESPA Claims Barred by Statute of Limitations

Fremont Investment & Loan v. Edwardsen

NYLJ 7/18/08, p. 28, col. 3

Supreme Ct., Richmond Cty

(Giacobbe, J.)

In second mortgagee's foreclosure action, first mortgagee moved to dismiss mortgagor's third party complaint against first mortgagee. The court granted first mortgagee's motion and dismissed each count of the third-party complaint except for the count alleging a violation of section 349 of the General Business Law, and held that as to that count, first mortgagee could renew its motion after discovery.

This foreclosure action was precipitated by mortgagor's default on its second mortgage. When second mortgagee brought the action, mortgagor brought a third-party complaint against first mortgagee, seeking rescission of the mortgage agreement, termination of first mortgagee's security interest, and a refund of all charges imposed in connection with the mortgage. Mortgagor alleged violations of the federal Truth-in-Lending Act (TILA), the federal Real Estate Settlement Procedures Act (RESPA), section 349 of the General Business Law, and common law prohibitions on aiding and abetting a fraud. First mortgagee moved to dismiss.

The court first held that mortgagor's claims under TILA and RESPA were barred by the one-year statute of limitations. The court acknowledged an exception in TILA permitting a mortgagor to raise statutory violations, even after the one-year period “as a matter of defense by recoupment or set-off” in an action to collect the mortgage debt. But the court held that the exception applies only when the action to collect the mortgage debt was brought by the party accused of statutory violations. Here, because the foreclosure action was brought by the second mortgagee, not the first mortgagee, the one-year statute of limitations remained applicable. The court did hold, however, that mortgagor's complaint stated a claim under section 349 of the General Business Law, even though mortgagor produced no documentary evidence to support its contention that first mortgagee was complicit in misrepresentation of her income and occupation on the mortgage application form. Because mortgagor alleged that the relevant documents were in first mortgagee's possession, the court held that discovery was appropriate, but that first mortgagee could renew its motion to dismiss after discovery was completed.

Protruding Fire Escape Does Not Establish Adverse Possession

136 West 46th Street v. Extell West 45th Street LLC

NYLJ 7/31/08, p. 26, col. 1

Supreme Ct., N.Y. Cty

(Shafer, J.)

In an action by a building owner to establish title by adverse possession, neighboring true owner moved for summary judgment.
The court granted true owner's motion, holding that a protruding fire escape and exhaust duct could not establish title by adverse possession.

True owner is developing a 52-story hotel on midtown Manhattan land previously operated as a parking lot. During the time the land was used as a parking lot, neighboring building owner built and maintained appendages, including a fire escape and an exhaust duct. The exhaust duct is low enough to the ground that a person standing on true owner's land has to “duck” to avoid it, and only cars, not trucks, could be parked under the duct. The fire escape, which protrudes from the second floor of the building, extends 21 inches into true owner's air space. When true owner asked neighbor to remove the appendages, neighbor brought this action. True owner sought summary judgment.

In granting true owner's summary judgment motion, the court held that an encroacher may not assert title by adverse possession to air space occupied by the encroachment. The court also noted that in the absence of any enclosure or cultivation, the building owner could not establish either actual possession or hostility.

EDC's Right of Entry Held Enforceable

New York City Economic Development Corp. v. Corn Exchange, LLC

NYLJ 7/30/08, p. 27, col. 3

Supreme Ct., N.Y. Cty

(Gische, J.)

In an action by the Economic Development Corporation to obtain title to premises it had previously conveyed, transferee moved to dismiss for failure to state a claim. The court denied defendant's motion, holding that when the EDC transferred the land, it retained an enforceable right of entry.

In 2003, the EDC conveyed the subject building to transferee, and transferee committed to rehabilitate the building and to establish a non-profit culinary institute in part of the building. Transferee was required to complete the changes and to obtain a certificate of occupancy within three years of the date of the deed, and the deed also provided that if transferee did not fulfill its obligations, the EDC reserved “the right to re-enter and take possession of the premises …, and the estate conveyed hereby to [transferee] shall thereupon terminate, and fee simple title to the premises … shall revest in [the EDC]…” When transferee did not complete the work within the time specified, the EDC brought this action to obtain title to the land under this deed provision. Transferee moved to dismiss, contending first that the deed provision created only a covenant, not a condition subsequent creating a right of entry, and second, that even if the deed did purport to create a right of entry, the right was unenforceable.

In denying transferee's motion, the court first held that the clear language of the deed was designed to create a right of entry, enforceable by forfeiture, not a covenant, which would be enforceable only by specific performance or money damages. The court then turned to transferee's argument that RPAPL section 1953(4) prevents enforcement of a right of entry when the condition subsequent is created in a devise for public or religious purposes. The court noted that section 1953 generally prevents self-help to exercise a right of entry, and requires instead a judicial proceeding. Section 4, by providing that “this section shall not apply” when the condition subsequent is created for public purposes simply preserved the common law rule in those cases, which would have permitted the grantor to exercise the right of entry without a judicial proceeding. The court rejected the argument that section 4 was designed instead to prevent all enforcement of the right of entry in cases where the right of entry is reserved in a deed designed for public or religious purposes.

COMMENT

Although RPAPL section 1953(2) requires that a court proceeding be brought to enforce a right of entry or reverter for non-performance of a condition subsequent, subsection (4) provides that “[t]his section shall not apply '” to conveyances that restrict land use to public, charitable, educational, or religious purposes. At common law, self-help was available to assert a possessory right for failure to fulfill a condition relative to land use. Section 1953 and its predecessor statute established a requirement that a court proceeding be brought to enforce a right of entry, and also permitted courts to refuse enforcement if the interest to be protected were not substantial. See RPAPL section 1953(3); NYLS Governor's Bill Jacket, L1958 C864. Corn Exchange construed subsection (4)'s exclusion for charitable conveyances, as an exclusion from the requirement that a court proceeding be brought, permitting the self-help that was available at common law, rather than as a provision denying a right of entry entirely when the restriction is for charitable purposes. Since '1953 simply adds to the common law a requirement of a court proceeding, any exclusion from the scope of the statute is an exclusion from this requirement. Exercise of a right of entry had been available prior to the statute's enactment.

Corn Exchange's construction of '1953 is supported by DiPietro v. County of Westchester, 237 AD2d 325, a Second Department case involving a reverter. In DiPietro, the defendant County of Westchester (“the County”) conveyed property to the defendant City of New Rochelle (“the City”) by deed providing that the property was to be used solely for park and recreation purposes, and in the event that it was put to any other use, or was not put to park and recreation purposes use within five years, the land would revert to the County. The City never put the premises to park or recreation use and after five years had passed, conveyed to property to the plaintiff, DiPietro, without seeking the County's consent. In DiPietro's declaratory judgment action, the court held that section 1953 permits an automatic reverter in cases of conveyances for public use. Accordingly, title to the property reverted to the County five years after its conveyance to the City. Although Corn Exchange involves a right of entry and not a reverter, section 1953 treats the interests identically.

Corn Exchange also noted that while conditions subsequent are generally disfavored because they impinge upon the alienation of an estate, the express language in the deed, which provided that if the defendant failed to use the premises in the manner required, then the plaintiff had the right to “re-enter and re-acquire” the premises, made it clear that the parties intended to create a condition subsequent and not a covenant, thereby triggering the application of '1953 and permitting exercise of a right of entry. The Court of Appeals has indicated that “[w]hile an express reentry reservation is not essential, it is well established that inclusion of such a right is one of the clearest and strongest manifestations supporting a finding of intent to create a future interest on a condition subsequent.” Suffolk Business Center, Inc v. Applied Digital Data Systems, Inc., 78 NY2d 383, 388-389 [quotations omitted] quoting Munro v. Syracuse, Lake Shore & N. R. R. Co., 200 NY 224, 231 .

TILA and RESPA Claims Barred by Statute of Limitations

Fremont Investment & Loan v. Edwardsen

NYLJ 7/18/08, p. 28, col. 3

Supreme Ct., Richmond Cty

(Giacobbe, J.)

In second mortgagee's foreclosure action, first mortgagee moved to dismiss mortgagor's third party complaint against first mortgagee. The court granted first mortgagee's motion and dismissed each count of the third-party complaint except for the count alleging a violation of section 349 of the General Business Law, and held that as to that count, first mortgagee could renew its motion after discovery.

This foreclosure action was precipitated by mortgagor's default on its second mortgage. When second mortgagee brought the action, mortgagor brought a third-party complaint against first mortgagee, seeking rescission of the mortgage agreement, termination of first mortgagee's security interest, and a refund of all charges imposed in connection with the mortgage. Mortgagor alleged violations of the federal Truth-in-Lending Act (TILA), the federal Real Estate Settlement Procedures Act (RESPA), section 349 of the General Business Law, and common law prohibitions on aiding and abetting a fraud. First mortgagee moved to dismiss.

The court first held that mortgagor's claims under TILA and RESPA were barred by the one-year statute of limitations. The court acknowledged an exception in TILA permitting a mortgagor to raise statutory violations, even after the one-year period “as a matter of defense by recoupment or set-off” in an action to collect the mortgage debt. But the court held that the exception applies only when the action to collect the mortgage debt was brought by the party accused of statutory violations. Here, because the foreclosure action was brought by the second mortgagee, not the first mortgagee, the one-year statute of limitations remained applicable. The court did hold, however, that mortgagor's complaint stated a claim under section 349 of the General Business Law, even though mortgagor produced no documentary evidence to support its contention that first mortgagee was complicit in misrepresentation of her income and occupation on the mortgage application form. Because mortgagor alleged that the relevant documents were in first mortgagee's possession, the court held that discovery was appropriate, but that first mortgagee could renew its motion to dismiss after discovery was completed.