A Notice of Pendency Does Not Convey an Interest in Land

It is axiomatic that the purpose of filing a notice of pendency (the “N/P”) under C.P.L.R. ' 6501 in an action seeking to affect an interest in real property is to render unnecessary the joining as defendants those whose interests are later obtained from a defendant named in the N/P and those whose interests are recorded subsequent to the filing of the N/P. The latter serves “to prevent the acquisition of an interest in the [realty which is the] subject matter of the suit '” e.g., Nomura Home Equity Loan Inc. v. Vacchio, 21 Misc. 3d 333, 336, 334 (Sup., Nass. Co. 2008). The N/P protects a pre-existing interest, but does not give to the filer an interest in the realty. Filing a N/P is not a substitute for recording. A number of reported decisions thus have highlighted the proposition that unless the filer already has a superior interest in the subject real estate, the filed N/P provides no protection to the filer against any other claimant to the land who records a document conveying an interest in the real property to that purchaser (such as a deed or a contract to purchase the subject realty). This is so even if the recordation of the instrument conveying an interest in the realty occurs subsequent to the filing of the N/P, so long as the conveyee took the instrument for value and without notice of the filer's claim.

Cases in Point

LaMarche v. Rosenblum

In LaMarche v. Rosenblum, 50 A.D.2d 636 (3d Dep't 1975), the issue was defined as priority of claims to an interest in the subject realty. Plaintiff LaMarche contracted on June 28, 1974, to purchase real property with closing set for October. Title did not pass and, in a related action, Defendant-Seller Rosenblum sued LaMarche for specific performance. Nevertheless, Rosenblum thereafter contracted to sell the realty to the Murphys, who, at that time, had no notice of the Rosenblum-LaMarche relationship. Thus, the Murphys were good-faith contract-vendees for value. When LaMarche later learned of the Murphy's contract, he commenced the instant action against Rosenblum for specific performance, and filed his N/P on May 30, 1975. Subsequently, on July 2, 1975, the Murphys recorded their contract to purchase the realty; the court noted that it was unclear from the record just when the Murphys learned of LaMarche's claim to the realty ' albeit they had no notice at the time of contracting and the later filing by LaMarche of his N/P was constructive notice of LaMarche's lawsuit and underlying claim to the Rosenblum realty. Mallick v. Farfan, 66 A.D.3d 649 (2d Dep't 2009). The motion court held that although LaMarche was, and thereafter the Murphys also became, contract vendees under executory contracts, since the Murphys recorded their contract (RPAPL ” 291 and 294), LaMarche's unrecorded contract to purchase was void as to the Murphys. The Appellate Division held that because the filing of the N/P serves only to preserve “existing property rights during litigation [cit. om.] [and does] not affect the merits of those interests,” Id., the N/P filed by LaMarche after he learned of the Murphy's contract did “not suffice to permit [LaMarche] to prevail over a prior unrecorded interest of which [LaMarche] has knowledge.” Ibid. In short, the N/P gave no interest in the realty to LaMarche. Since LaMarche had no priority over the Murphys' later recorded interest, he was not entitled to specific performance and his N/P properly was canceled.

Varon v. Annino

In Varon v. Annino, 170 A.D.2d 445 (2d Dep't 1991), Defendant Ciervo contracted to sell her realty to Defendant Annino ' and three days later contracted to sell the land to Plaintiff Varon. The latter never recorded her executory contract. Annino, however, later obtained and recorded his deed to the real property. In Varon's action for specific performance in which she filed a N/P, the Appellate Division held for Annino: “When two or more prospective buyers contract with a prospective seller for the sale of the same property, Real Property Law ” 291 and 294 give priority to the prospective buyer whose conveyance or contract is duly recorded ' As the subsequent purchaser, the Plaintiff had to record her contract first in order to prevail ' Having failed to avail herself of either Real Property Law ” 291 or 294, the Plaintiff may not successfully claim that her filing of a [N/P] serves as a substitute therefor.” Ibid.

2386 Creston Avenue Realty, LLC v. M-P-M Management Corp.

More recently, in 2386 Creston Avenue Realty, LLC v. M-P-M Management Corp., 58 A.D.3d 158, 160, 162 (1st Dep't 2008), app. den. 2009 NY LEXIS 342; app. den. 2009 NY LEXIS 547 (2009), the court again held that a contract vendee's failure to avail itself of R.P.L. ” 291 and/or 294 is fatal; and, the filing of a N/P by the contract vendee in its specific performance action does not create “an interest in real property superior to a subsequent good faith purchaser from the same vendor who records a contract or conveyance.” There, Plaintiff contracted to buy realty from Defendant M-P-M. The closing was adjourned; M-P-M eventually canceled the contract. Prior to such cancellation, M-P-M contracted to sell the land to Pioneer Parking, which was unaware of Plaintiff's dealings with M-P-M. The sale to Pioneer Parking closed the day that M-P-M canceled its earlier contract with Plaintiff. The deed to Pioneer Parking was delivered for recording the same day that Plaintiff commenced a specific performance action and filed its N/P of such action. Pioneer Parking eventually was made a co-Defendant. The IAS court dismissed the complaint and directed vacatur of the N/P because Plaintiff had not recorded its contract. The Appellate Division affirmed, holding that the N/P did “not create rights that did not already exist [cit. om.].” The First Department went on to note that it would have been “only if Plaintiff had an enforceable interest in the property superior to Pioneer's interest that Pioneer would be bound by the outcome of the litigation [cit. om.], [i.e., subject to the N/P]. The filing of a [N/P] does not substitute for the recording of the contract of sale or conveyance.” 58 A.D.3d at 161.

Parenthetically, by the time Plaintiff commenced its action, M-P-M had already conveyed title to Pioneer Parking. Thus, it was impossible to award specific performance to Plaintiff. Its action, therefore, could no longer affect title, use, possession or enjoyment of the real property upon which to predicate its N/P. See Xiao Yuan v. Li Dan Zhang, 58 A.D.3d 723 (2d Dep't 2009), citing the M-P-M case; the action properly was dismissed.

Conclusion

It is the recording under R.P.L. ” 291 or 294 of an executory contract to buy land which serves to protect the recording contract-vendee from competing unrecorded claims to the realty ' even if the unrecorded claims were first in time so long as the recording contract-vendee is a true BFP for value. Cf., Novastar Mortgage, Inc. v. Mendoza, 26 A.D.3d 479, 480 (2d Dep't 2006) where the court denied intervenor Mendoza's motion to vacate the judgment of foreclosure and sale where Mendoza recorded his deed to the realty subsequent to Plaintiff's filed N/P, the court holding:

Here, the record demonstrates that the deed conveying a one-half interest in the premises to nonparty Francisco Mendoza was recorded approximately one month after the plaintiff commenced this foreclosure action and filed a [N/P]. Accordingly, Mendoza had constructive notice of the foreclosure action at the time his conveyance was recorded ' .

Prudence suggests that executory contracts be recorded as soon as possible. Abiding the contract-vendee's commencement of a specific performance action coupled with the filing of a N/P of such action, even if the N/P is filed prior to the recording of the executory contract, normally will not suffice.

Joel David Sharrow is counsel to Moses & Singer LLP, Manhattan, and specializes in real estate-oriented and creditor rights litigation. ' Joel David Sharrow, 2011.

It is axiomatic that the purpose of filing a notice of pendency (the “N/P”) under C.P.L.R. ' 6501 in an action seeking to affect an interest in real property is to render unnecessary the joining as defendants those whose interests are later obtained from a defendant named in the N/P and those whose interests are recorded subsequent to the filing of the N/P. The latter serves “to prevent the acquisition of an interest in the [realty which is the] subject matter of the suit '” e.g., Nomura Home Equity Loan Inc. v. Vacchio , 21 Misc. 3d 333, 336, 334 (Sup., Nass. Co. 2008). The N/P protects a pre-existing interest, but does not give to the filer an interest in the realty. Filing a N/P is not a substitute for recording. A number of reported decisions thus have highlighted the proposition that unless the filer already has a superior interest in the subject real estate, the filed N/P provides no protection to the filer against any other claimant to the land who records a document conveying an interest in the real property to that purchaser (such as a deed or a contract to purchase the subject realty). This is so even if the recordation of the instrument conveying an interest in the realty occurs subsequent to the filing of the N/P, so long as the conveyee took the instrument for value and without notice of the filer's claim.

Cases in Point

LaMarche v. Rosenblum

In LaMarche v. Rosenblum , 50 A.D.2d 636 (3d Dep't 1975), the issue was defined as priority of claims to an interest in the subject realty. Plaintiff LaMarche contracted on June 28, 1974, to purchase real property with closing set for October. Title did not pass and, in a related action, Defendant-Seller Rosenblum sued LaMarche for specific performance. Nevertheless, Rosenblum thereafter contracted to sell the realty to the Murphys, who, at that time, had no notice of the Rosenblum-LaMarche relationship. Thus, the Murphys were good-faith contract-vendees for value. When LaMarche later learned of the Murphy's contract, he commenced the instant action against Rosenblum for specific performance, and filed his N/P on May 30, 1975. Subsequently, on July 2, 1975, the Murphys recorded their contract to purchase the realty; the court noted that it was unclear from the record just when the Murphys learned of LaMarche's claim to the realty ' albeit they had no notice at the time of contracting and the later filing by LaMarche of his N/P was constructive notice of LaMarche's lawsuit and underlying claim to the Rosenblum realty. Mallick v. Farfan , 66 A.D.3d 649 (2d Dep't 2009). The motion court held that although LaMarche was, and thereafter the Murphys also became, contract vendees under executory contracts, since the Murphys recorded their contract (RPAPL ” 291 and 294), LaMarche's unrecorded contract to purchase was void as to the Murphys. The Appellate Division held that because the filing of the N/P serves only to preserve “existing property rights during litigation [cit. om.] [and does] not affect the merits of those interests,” Id., the N/P filed by LaMarche after he learned of the Murphy's contract did “not suffice to permit [LaMarche] to prevail over a prior unrecorded interest of which [LaMarche] has knowledge.” Ibid. In short, the N/P gave no interest in the realty to LaMarche. Since LaMarche had no priority over the Murphys' later recorded interest, he was not entitled to specific performance and his N/P properly was canceled.

Varon v. Annino

In Varon v. Annino , 170 A.D.2d 445 (2d Dep't 1991), Defendant Ciervo contracted to sell her realty to Defendant Annino ' and three days later contracted to sell the land to Plaintiff Varon. The latter never recorded her executory contract. Annino, however, later obtained and recorded his deed to the real property. In Varon's action for specific performance in which she filed a N/P, the Appellate Division held for Annino: “When two or more prospective buyers contract with a prospective seller for the sale of the same property, Real Property Law ” 291 and 294 give priority to the prospective buyer whose conveyance or contract is duly recorded ' As the subsequent purchaser, the Plaintiff had to record her contract first in order to prevail ' Having failed to avail herself of either Real Property Law ” 291 or 294, the Plaintiff may not successfully claim that her filing of a [N/P] serves as a substitute therefor.” Ibid.

2386 Creston Avenue Realty, LLC v. M-P-M Management Corp.

More recently, in 2386 Creston Avenue Realty, LLC v. M-P-M Management Corp. , 58 A.D.3d 158, 160, 162 (1st Dep't 2008), app. den. 2009 NY LEXIS 342; app. den. 2009 NY LEXIS 547 (2009), the court again held that a contract vendee's failure to avail itself of R.P.L. ” 291 and/or 294 is fatal; and, the filing of a N/P by the contract vendee in its specific performance action does not create “an interest in real property superior to a subsequent good faith purchaser from the same vendor who records a contract or conveyance.” There, Plaintiff contracted to buy realty from Defendant M-P-M. The closing was adjourned; M-P-M eventually canceled the contract. Prior to such cancellation, M-P-M contracted to sell the land to Pioneer Parking, which was unaware of Plaintiff's dealings with M-P-M. The sale to Pioneer Parking closed the day that M-P-M canceled its earlier contract with Plaintiff. The deed to Pioneer Parking was delivered for recording the same day that Plaintiff commenced a specific performance action and filed its N/P of such action. Pioneer Parking eventually was made a co-Defendant. The IAS court dismissed the complaint and directed vacatur of the N/P because Plaintiff had not recorded its contract. The Appellate Division affirmed, holding that the N/P did “not create rights that did not already exist [cit. om.].” The First Department went on to note that it would have been “only if Plaintiff had an enforceable interest in the property superior to Pioneer's interest that Pioneer would be bound by the outcome of the litigation [cit. om.], [i.e., subject to the N/P]. The filing of a [N/P] does not substitute for the recording of the contract of sale or conveyance.” 58 A.D.3d at 161.

Parenthetically, by the time Plaintiff commenced its action, M-P-M had already conveyed title to Pioneer Parking. Thus, it was impossible to award specific performance to Plaintiff. Its action, therefore, could no longer affect title, use, possession or enjoyment of the real property upon which to predicate its N/P. See Xiao Yuan v. Li Dan Zhang , 58 A.D.3d 723 (2d Dep't 2009), citing the M-P-M case; the action properly was dismissed.

Conclusion

It is the recording under R.P.L. ” 291 or 294 of an executory contract to buy land which serves to protect the recording contract-vendee from competing unrecorded claims to the realty ' even if the unrecorded claims were first in time so long as the recording contract-vendee is a true BFP for value. Cf., Novastar Mortgage, Inc. v. Mendoza , 26 A.D.3d 479, 480 (2d Dep't 2006) where the court denied intervenor Mendoza's motion to vacate the judgment of foreclosure and sale where Mendoza recorded his deed to the realty subsequent to Plaintiff's filed N/P, the court holding:

Here, the record demonstrates that the deed conveying a one-half interest in the premises to nonparty Francisco Mendoza was recorded approximately one month after the plaintiff commenced this foreclosure action and filed a [N/P]. Accordingly, Mendoza had constructive notice of the foreclosure action at the time his conveyance was recorded ' .

Prudence suggests that executory contracts be recorded as soon as possible. Abiding the contract-vendee's commencement of a specific performance action coupled with the filing of a N/P of such action, even if the N/P is filed prior to the recording of the executory contract, normally will not suffice.

Joel David Sharrow is counsel to Moses & Singer LLP, Manhattan, and specializes in real estate-oriented and creditor rights litigation. ' Joel David Sharrow, 2011.