Real Property Law

AppDiv, Second Dept.

(memorandum opinion)

In a proceeding to extend the term of two mechanic's liens, lienor appealed from Supreme Court's orders denying the petition. The Appellate Division reversed, holding that because the petitions to extend the liens were timely filed, Supreme Court had the power to extend the liens nunc pro tunc, even though the liens had expired by the time the petition was presented to a judge.

Mechanic's lienor had filed two liens against the subject real property in May 2008, and filed petitions to extend the liens for an additional year in May 2009. The two one-year extensions were stamped as received on May 22, 2009. On Wednesday, May 19, 2010, lienor filed petitions to extend each of the liens for an additional year, informing the court clerk that the liens would expire on the upcoming Saturday. Nevertheless, a justice did not receive the petitions until Tuesday, May 25. At that time, Supreme Court denied the petitions, concluding that it lacked power to extend the liens once they had expired.

In reversing, the Appellate Division noted that nothing in section 17 of the Lien Law prohibits granting of an extension where the application is timely filed but not presented to a judge until after the lien has expired. As a result, the court held that Supreme Court has power to grant extensions upon good cause shown. Here, the court found no prejudice to the property owner from late extension, and exercised its discretion to grant the petitions to extend the liens.

COMMENT

Under section 17 of the Lien Law, a mechanic's lien is valid for one year, and can be extended only if the lienor either commences foreclosure proceedings or files for an extension with the county clerk prior to the expiration of the current term. N.Y. Lien Law ' 17. Once a lien has expired, it no longer exists, and a court will not revive it. Contelmo's Sand & Gravel, Inc. v. J & J Milano, Inc., 96 A.D.2d. 1090 (where court rejected an extension for a mechanic's lien because the extension was filed seven days after the lien had expired, even though the court had extended the lien several times previously). Courts have held that CPLR 2004, which authorizes a court to extend the time fixed by any statute ' for doing any act, upon such terms as may be just and upon good cause shown, whether the application for extension is made before or after the expiration of the time fixed,” has been held not to apply to an application to extend an already expired lien. See Paolangeli v. Sopp., 145 Misc. 2d 259, 261-62.

Although a court will deny a lien extension filed after the lien has expired, courts will generally issue an order nunc pro tunc to reinstate an expired lien if a lienor has timely filed with the county clerk's office, but the extension is delayed by the clerk or by the reviewing judge. Thus, in Makovic v. Aigbogun, 41 A.D.3d 342, the court affirmed an order granting a lien extension a month after the lien's expiration because the lienor had filed for the extension of a notice of pendency two and a half months prior to its termination. Id. Courts have even issued nunc pro tunc extensions when the lienor's application was rejected due to a defect in the filing, causing the lien to lapse in the interim. For instance, in H.M. Hughes Co., Inc. v. Carmania Corp., N.V., the appellate court extended a notice of pendency that a clerk had initially rejected because the filing had mis-identified the relevant property. 187 A.D.2d 287. The court determined that that the lapse was not an error by the lienor since the lienor could have cured the defect prior to the lien's expiration if notified of the problem.

Even if a lienor timely filed and the delay was a product of processing the lien, a court will only apply a nunc pro tunc order to an expired lien if the extension does not cause unfairness to related parties. In H.M. Hughes, the court extended the lien nunc pro tunc because even though the filed extension incorrectly identified the property in question, the defect in the extension was minor and clearly notified the owner of the lienor's interest in the property. By contrast, in Gletzer v. Harris 12 N.Y. 3d 468, the court refused to apply a nunc pro tunc extension to a judgment lien because during the three year period that the court reviewed the lien extension, third-party mortgagees had provided loans to the lienee with the understanding that they possessed the senior interest in the property

Third-Party Beneficiary Has Standing to Enforce Restrictive Covenant

Don Bautista Food, Inc. v. King Jerome Realty, Inc.

NYLJ 9/24/12

Supreme Ct., Bronx Cty.

(Aarons, J.)

In an action to enjoin landowner from operating a retail establishment selling food, neighboring owner sought a preliminary injunction. The court granted the preliminary injunction, conditioned on payment of a $280,000 undertaking, holding that neighboring landowner had demonstrate a likelihood of success on the merits and irreparable harm.

B & K Realty Management, of which Berkovits is the president, owns 1434 Jerome Avenue. B & K leased the premises to Villa Trina in 1992, and Villa Trina operated a C-Town supermarket on the premises. In 2004, Villa Trina sold its interest in C-Town, including the lease, to Don Bautista. Until 1991, 1412-1424 Jerome Avenue was owned by 1412 Jerome Associates, of which Berkovits was a partner. In that year, 1412 Jerome sold to King Jerome Realty, Inc. The deed to King Jerome includes a covenant that neither King Jerome nor its successors or assigns would lease space in the property for use as a supermarket or any food store selling food for off-premises construction. The deed provided that the restrictive covenant was to run with the land. King Jerome built a commercial building on the lot, and operated a general merchandise discount store on the premises. In 2011, King Jerome leased the ground floor and basement area of its building to Family Dollar for use as a variety discount store. The lease precluded Family Dollar from making any use that would be substantially the same as any other business located in the building, or that would violate any exclusive use rights granted to any tenant in the building. Family Dollar began building on the leased premises with the intention of operating a retail store. Don Bautista then brought this action to prevent violation of the restrictive covenant.

In granting a preliminary injunction, the court concluded that a restrictive covenant will be enforced when the parties' intent is clear and the limitation is reasonable. Here, the court concluded that Don Bautista had standing to enforce the covenant as a third-party beneficiary. The court relied on Berkovits' affidavit, which stated that the restrictive covenant was intended to benefit C-Town by eliminating competition. The court also relied on a statement by Berkovits that he would not have sold the building without the covenant. The court noted, however, that questions of fact remained about whether Family Dollar's intended use violated the covenant. The court noted that issuance of a injunction might interfere with King Jerome's anticipated rental income, and therefore conditioned issuance of the injunction on Don Bautista' payment of a $280,000 undertaking to protect King Jerome if its ultimately determined that Don Bautista was not entitled to an injunction.

COMMENT

Neighbors of land burdened by restrictive covenants will have standing to enforce those restrictions when the deed expressly confers standing on the neighbor or when the benefited and burdened land are part of a common scheme created by a common grantor. Thus, in Nature Conservatory v. Congel, 253 A.D.2d 248, the previous owner of a large, undeveloped tract imposed restriction in deed to current owner that land would “remain in its natural state ' for the benefit of an enforceable by all parties owning property adjoining the premises hereby conveyed.” The court held that the express language in the deed conferred standing on the neighbors to prevent construction of residence on the tract. The court rejected the argument, derived from Estate of Thomson v. Wade, 69 N.Y.2d 570, that neighbors lacked standing as “strangers to the deed,” holding that the Thomson rule applied only to easements, not restrictive covenants.

In Booth v. Knipe, 225 N.Y. 390, common-grantor had subdivided a large tract and conveyed all lots subject to restriction that each “be used only as a private residence for one family '” Common-grantor did not retain a parcel for himself within the subdivision, but did file a map of the entire subdivision, and sold each parcel by reference to the map. When an owner began operating a maternity hospital on his lot, the court, in an opinion by Judge Cardozo, held that the common scheme conferred standing on the owners of all lots on the map.

Even when there is neither a common plan nor express language in the deed conferring standing on neighbors, courts have been willing to find third-party standing in cases like Don Bautista, where the intent to benefit the third party is clear from the circumstances. In Zamiarski v. Kozial, 18 A.D.2d 297, the court reversed the trial court's grant of summary judgment to a restricted owner constructed a residence within inches of his neighbor's lot line, despite a restriction in owner's chain of title that “no building shall ever be erected within 10 feet of [lot lines].” The court held that neighbor's affidavit that owner's predecessor-in-title had imposed the set-back for neighbor's benefit was sufficient to raise a question of fact precluding summary judgment. By contrast, when the intended beneficiaries are expressly named in the deed creating the restriction, other parties have no standing to enforce. Thus, in Sodus Bay Heights Golf Club, Inc. v. Andrews, 2002 N.Y. Slip Op. 40017(U) (Sup Ct, Wayne County 2002), a golf club sought to enforce restriction in owner's deed that “no obstructions shall be permitted on lot which shall hide the view of other residents in Sodus Bay Heights.” The court found that golf club did not have standing as third-party beneficiary because: 1) restriction was for express protection of other Sodus Bay Heights residents; and 2) golf club did not show that it was an intended beneficiary by implication.

Buyer Entitled to Return of Down Payment

Candullo v. Nicosia

NYLJ 9/28/11, p. 28, col. 2

AppDiv, Second Dept.

(memorandum opinion)

In sellers' action to retain a down payment, both parties appealed from Supreme Court's denial of their respective summary judgment motions. The Appellate Division reversed and granted buyers' summary judgment motion, holding that buyers had demonstrated that sellers were unable to deliver title as provided in the contract of sale.

Sellers contracted to sell a single family home to purchasers. The sale contract required seller to deliver “such title as any title underwriter ' would be willing to approve and insure ' ” Before closing, buyers ordered a survey, which revealed a fence that extended over the rear property line by 28 feet, at a length of 160 feet. The buyers' insurer refused to insure title free and clear of the encroachment, and buyers refused to close. Sellers then brought this action to retain the down payment, and Supreme Court denied summary judgment to both parties.

In reversing, the Appellate Division held that the buyers had established that sellers could not deliver the title they had promised to deliver. Seller's breach entitled buyer to return of the moneys they had paid, together with a refund for particular charges specified in the contract.

Court Has Power to Extend Expired Liens

Matter of Navillus Tile, Inc. v. LC Main, LLC

NYLJ 9/14/12, p. 29, col. 6

AppDiv, Second Dept.

(memorandum opinion)

In a proceeding to extend the term of two mechanic's liens, lienor appealed from Supreme Court's orders denying the petition. The Appellate Division reversed, holding that because the petitions to extend the liens were timely filed, Supreme Court had the power to extend the liens nunc pro tunc, even though the liens had expired by the time the petition was presented to a judge.

Mechanic's lienor had filed two liens against the subject real property in May 2008, and filed petitions to extend the liens for an additional year in May 2009. The two one-year extensions were stamped as received on May 22, 2009. On Wednesday, May 19, 2010, lienor filed petitions to extend each of the liens for an additional year, informing the court clerk that the liens would expire on the upcoming Saturday. Nevertheless, a justice did not receive the petitions until Tuesday, May 25. At that time, Supreme Court denied the petitions, concluding that it lacked power to extend the liens once they had expired.

In reversing, the Appellate Division noted that nothing in section 17 of the Lien Law prohibits granting of an extension where the application is timely filed but not presented to a judge until after the lien has expired. As a result, the court held that Supreme Court has power to grant extensions upon good cause shown. Here, the court found no prejudice to the property owner from late extension, and exercised its discretion to grant the petitions to extend the liens.

COMMENT

Under section 17 of the Lien Law, a mechanic's lien is valid for one year, and can be extended only if the lienor either commences foreclosure proceedings or files for an extension with the county clerk prior to the expiration of the current term. N.Y. Lien Law ' 17. Once a lien has expired, it no longer exists, and a court will not revive it. Contelmo's Sand & Gravel, Inc. v. J & J Milano, Inc., 96 A.D.2d. 1090 (where court rejected an extension for a mechanic's lien because the extension was filed seven days after the lien had expired, even though the court had extended the lien several times previously). Courts have held that CPLR 2004, which authorizes a court to extend the time fixed by any statute ' for doing any act, upon such terms as may be just and upon good cause shown, whether the application for extension is made before or after the expiration of the time fixed,” has been held not to apply to an application to extend an already expired lien. See Paolangeli v. Sopp., 145 Misc. 2d 259, 261-62.

Although a court will deny a lien extension filed after the lien has expired, courts will generally issue an order nunc pro tunc to reinstate an expired lien if a lienor has timely filed with the county clerk's office, but the extension is delayed by the clerk or by the reviewing judge. Thus, in Makovic v. Aigbogun, 41 A.D.3d 342, the court affirmed an order granting a lien extension a month after the lien's expiration because the lienor had filed for the extension of a notice of pendency two and a half months prior to its termination. Id. Courts have even issued nunc pro tunc extensions when the lienor's application was rejected due to a defect in the filing, causing the lien to lapse in the interim. For instance, in H.M. Hughes Co., Inc. v. Carmania Corp., N.V., the appellate court extended a notice of pendency that a clerk had initially rejected because the filing had mis-identified the relevant property. 187 A.D.2d 287. The court determined that that the lapse was not an error by the lienor since the lienor could have cured the defect prior to the lien's expiration if notified of the problem.

Even if a lienor timely filed and the delay was a product of processing the lien, a court will only apply a nunc pro tunc order to an expired lien if the extension does not cause unfairness to related parties. In H.M. Hughes, the court extended the lien nunc pro tunc because even though the filed extension incorrectly identified the property in question, the defect in the extension was minor and clearly notified the owner of the lienor's interest in the property. By contrast, in Gletzer v. Harris 1 2 N.Y. 3d 468, the court refused to apply a nunc pro tunc extension to a judgment lien because during the three year period that the court reviewed the lien extension, third-party mortgagees had provided loans to the lienee with the understanding that they possessed the senior interest in the property

Third-Party Beneficiary Has Standing to Enforce Restrictive Covenant

Don Bautista Food, Inc. v. King Jerome Realty, Inc.

NYLJ 9/24/12

Supreme Ct., Bronx Cty.

(Aarons, J.)

In an action to enjoin landowner from operating a retail establishment selling food, neighboring owner sought a preliminary injunction. The court granted the preliminary injunction, conditioned on payment of a $280,000 undertaking, holding that neighboring landowner had demonstrate a likelihood of success on the merits and irreparable harm.

B & K Realty Management, of which Berkovits is the president, owns 1434 Jerome Avenue. B & K leased the premises to Villa Trina in 1992, and Villa Trina operated a C-Town supermarket on the premises. In 2004, Villa Trina sold its interest in C-Town, including the lease, to Don Bautista. Until 1991, 1412-1424 Jerome Avenue was owned by 1412 Jerome Associates, of which Berkovits was a partner. In that year, 1412 Jerome sold to King Jerome Realty, Inc. The deed to King Jerome includes a covenant that neither King Jerome nor its successors or assigns would lease space in the property for use as a supermarket or any food store selling food for off-premises construction. The deed provided that the restrictive covenant was to run with the land. King Jerome built a commercial building on the lot, and operated a general merchandise discount store on the premises. In 2011, King Jerome leased the ground floor and basement area of its building to Family Dollar for use as a variety discount store. The lease precluded Family Dollar from making any use that would be substantially the same as any other business located in the building, or that would violate any exclusive use rights granted to any tenant in the building. Family Dollar began building on the leased premises with the intention of operating a retail store. Don Bautista then brought this action to prevent violation of the restrictive covenant.

In granting a preliminary injunction, the court concluded that a restrictive covenant will be enforced when the parties' intent is clear and the limitation is reasonable. Here, the court concluded that Don Bautista had standing to enforce the covenant as a third-party beneficiary. The court relied on Berkovits' affidavit, which stated that the restrictive covenant was intended to benefit C-Town by eliminating competition. The court also relied on a statement by Berkovits that he would not have sold the building without the covenant. The court noted, however, that questions of fact remained about whether Family Dollar's intended use violated the covenant. The court noted that issuance of a injunction might interfere with King Jerome's anticipated rental income, and therefore conditioned issuance of the injunction on Don Bautista' payment of a $280,000 undertaking to protect King Jerome if its ultimately determined that Don Bautista was not entitled to an injunction.

COMMENT

Neighbors of land burdened by restrictive covenants will have standing to enforce those restrictions when the deed expressly confers standing on the neighbor or when the benefited and burdened land are part of a common scheme created by a common grantor. Thus, in Nature Conservatory v. Congel, 253 A.D.2d 248, the previous owner of a large, undeveloped tract imposed restriction in deed to current owner that land would “remain in its natural state ' for the benefit of an enforceable by all parties owning property adjoining the premises hereby conveyed.” The court held that the express language in the deed conferred standing on the neighbors to prevent construction of residence on the tract. The court rejected the argument, derived from Estate of Thomson v. Wade, 69 N.Y.2d 570, that neighbors lacked standing as “strangers to the deed,” holding that the Thomson rule applied only to easements, not restrictive covenants.

In Booth v. Knipe, 225 N.Y. 390, common-grantor had subdivided a large tract and conveyed all lots subject to restriction that each “be used only as a private residence for one family '” Common-grantor did not retain a parcel for himself within the subdivision, but did file a map of the entire subdivision, and sold each parcel by reference to the map. When an owner began operating a maternity hospital on his lot, the court, in an opinion by Judge Cardozo, held that the common scheme conferred standing on the owners of all lots on the map.

Even when there is neither a common plan nor express language in the deed conferring standing on neighbors, courts have been willing to find third-party standing in cases like Don Bautista, where the intent to benefit the third party is clear from the circumstances. In Zamiarski v. Kozial, 18 A.D.2d 297, the court reversed the trial court's grant of summary judgment to a restricted owner constructed a residence within inches of his neighbor's lot line, despite a restriction in owner's chain of title that “no building shall ever be erected within 10 feet of [lot lines].” The court held that neighbor's affidavit that owner's predecessor-in-title had imposed the set-back for neighbor's benefit was sufficient to raise a question of fact precluding summary judgment. By contrast, when the intended beneficiaries are expressly named in the deed creating the restriction, other parties have no standing to enforce. Thus, in Sodus Bay Heights Golf Club, Inc. v. Andrews, 2 002 N.Y. Slip Op. 40017(U) (Sup Ct, Wayne County 2002), a golf club sought to enforce restriction in owner's deed that “no obstructions shall be permitted on lot which shall hide the view of other residents in Sodus Bay Heights.” The court found that golf club did not have standing as third-party beneficiary because: 1) restriction was for express protection of other Sodus Bay Heights residents; and 2) golf club did not show that it was an intended beneficiary by implication .

Buyer Entitled to Return of Down Payment

Candullo v. Nicosia

NYLJ 9/28/11, p. 28, col. 2

AppDiv, Second Dept.

(memorandum opinion)

In sellers' action to retain a down payment, both parties appealed from Supreme Court's denial of their respective summary judgment motions. The Appellate Division reversed and granted buyers' summary judgment motion, holding that buyers had demonstrated that sellers were unable to deliver title as provided in the contract of sale.

Sellers contracted to sell a single family home to purchasers. The sale contract required seller to deliver “such title as any title underwriter ' would be willing to approve and insure ' ” Before closing, buyers ordered a survey, which revealed a fence that extended over the rear property line by 28 feet, at a length of 160 feet. The buyers' insurer refused to insure title free and clear of the encroachment, and buyers refused to close. Sellers then brought this action to retain the down payment, and Supreme Court denied summary judgment to both parties.

In reversing, the Appellate Division held that the buyers had established that sellers could not deliver the title they had promised to deliver. Seller's breach entitled buyer to return of the moneys they had paid, together with a refund for particular charges specified in the contract.