Real Property Law

AppDiv, Second Dept.

(memorandum opinion)

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In a declaratory judgment action by owner of a roadway against holder of an easement, roadway owner appealed from Supreme Court's dismissal of the complaint. The Appellate Division reversed, holding that the documentary evidence presented by easement holder did not establish conclusively that easement holder had a right to build a driveway to connect to the road.

Roadway owner owns a private road which is, in most places, 30 feet wide. Only a 12- to 13-foot wide portion of the roadway is actually paved. In 1950, owners of abutting land were granted an easement of ingress and egress over the road. Current holder of the easement owns an abutting parcel that has been subdivided into three building lots. One of those lots abuts the roadway in an area where the private road is wider than 30 feet (the “bulge” area). Easement holder plans to build a driveway across the bulge area to reach the paved portion of the roadway. Roadway owner brought this action for a declaration that easement holder was not entitled to build the driveway, but Supreme Court dismissed the complaint, relying on the written easement of ingress and egress. Roadway owner appealed.

In reversing, the Appellate Division noted that an easement granted in general terms includes the right to make any reasonable use necessary and convenient for the easement's purpose, so long as the easement holder does not materially increase the burden of the servient estate. In this case, the court held that the written easement did not establish, as a matter of law, that the proposed driveway was necessary and convenient for the easement's purpose, or that the driveway did not materially increase the burden on the servient estate. As a result, documentary evidence was not sufficient to permit dismissal of the complaint.

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Mortgagee Not Entitled to Foreclose Without Proof That It Was Holder of Underlying Note

Homecomings Financial, LLC v. Guldi

NYLJ 7/9/13, p. 28, col. 1

AppDiv, Second Dept.

(memorandum opinion)

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In a mortgage foreclosure action, mortgagor appealed from Supreme Court's award of summary judgment to mortgagee. The Appellate Division reversed and awarded summary judgment to mortgagor, relying on the absence of evidence that the mortgagee, at the time the foreclosure proceeding was brought, was the holder of the note underlying the mortgage.

In 2004, Guldi executed an adjustable rate note and mortgage in favor of Greenpoint Mortgage. The mortgage instrument identified Mortgage Electronic Registration Systems, Inc. (MERS) as the “nominee” for Greenpoint. The following year, MERS brought this foreclosure action as nominee for Greenpoint. Then, in 2006, MERS purported to assign the mortgage instrument to current mortgagee, Homecomings. The same month, Guldi died and his son was appointed administrator of the estate. In 2008, Supreme Court amended the caption by substituting Homecomings and the administrator as parties to the proceeding. When Homecomings filed an amended complaint, Guldi's administrator contended that Homecomings lacked standing to bring the foreclosure action. Supreme Court nevertheless awarded summary judgment to mortgagee, and mortgagor appealed.

In reversing, the Appellate Division emphasized that a mortgagee has standing to bring a foreclosure action only when it is the holder or assignee of both the mortgage and the underlying note at the time the foreclosure action is commenced. In this case, Homecomings failed to submit any evidence that the note was physically delivered to MERS before commencement of the foreclosure action, or that Greenpoint had assigned the note to MERS before commencement. As a result, even if MERS assigned the note to Homecomings during the course of the action, that assignment would not establish Homecomings' right to the note, because MERS could not transfer more than it had. The court therefore awarded summary judgment to the administrator dismissing the complaint, without prejudice.

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Neighbor Liable for Damages Caused by Excavation Work

East 77 Owners Co v. King Sha Group

NYLJ 7/17/13, p. 21, col.1

Supreme Ct., N.Y. Cty.

(Schoenfeld, J.)

In an action by landowner for damages caused by a neighbor's excavation work, both parties sought judicial resolution of neighbor's liability and the amount of damages. The court held that neighbor was liable for construction costs, lost rent and professional fees, but not increased insurance premiums or interest on a construction loan.

Neighbor owned a parking garage adjacent to landowner's apartment building. Neighbor began excavation work to create a sub-basement level in its garage, and hired various contractors and subcontractors. The New York City Department of Buildings (DOB) issued a notice of violation stating that neighbor had violated the Administrative Code by failing to properly carry out excavation work at more than 10 feet below grade. DOB ordered a stoppage of work. When neighbor challenged DOB's violation notices, and administrative law judge found that neighbor's lack of structural support had created a dangerous condition. As a result of the excavation, landowner suffered structural damage its building, requiring relocation of all tenants for four years while repairs were made, including underpinning, shoring, and other support work. Landowner then brought this action for damages against neighbor, its general contractor, its foundation subcontractor, and two other entities. The parties, other than the foundation subcontractor, reached a partial settlement that resulted in a release from liability for all parties other than the neighbor and the foundation subcontractor.

In adjudicating landowner's claims against neighbor, the court started by holding that under the New York City Administrative Code, excavation undertaken at a depth of more than ten feet becomes strictly liable for any damages proximately caused to an adjacent building. Based on the code provision, the court held that neighbor was liable for more than $1.5 million in construction costs, more than $750,000 in lost rent, and nearly $375,000 in professional fees. But the court also held that neighbors were not liable for increased insurance premiums paid after the damage was done, or for the closing costs and interests incurred by landowner in the course of borrowing money to do the necessary construction work. The court also awarded neighbor a default judgment on its crossclaim against the foundation subcontractor.'

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Lot Size Covenant Binding Because It Continues to Benefit Neighbors

BFHA v. Eastern NY Enterprises

NYLJ 7/31/13

Supreme Ct., Queens Cty.

(Lebowitz, J.)

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Homeowners Association sought a permanent injunction against subdivision of a corner lot for the purposes of building two single-family homes. The court granted the injunction, holding that a lot size covenant was binding on the landowner proposing the subdivision.

In 2010, landowner paid $1,050,000 for a corner parcel located at 163rd Street and 35th Avenue in Queens. The parcel measured 120-feet wide by 100-feet deep. Landowner's objective was to subdivide the parcel into two building lots, both of which would comply with New York City zoning laws. The area, however, is subject to a restrictive covenant, created in 1909, which requires houses on corner lots to have a minimum width of 80 feet, and other houses to have a minimum width of 60 feet, leaving the parcel 20 feet too narrow to permit two houses in conformity with the zoning ordinance. The homeowners association brought this action to enforce the covenant, and to enjoin the subdivision.

In granting the injunction, the court first rejected landowner's argument that the association lacked standing to enforce the covenant. The court then turned to landowner's argument that the covenant no longer generated substantial benefit because a variety of homes, including apartment houses, are on the same block as landowner's parcel.

First, the covenant itself permitted apartment houses and two family houses at the same time it imposed lot size restrictions on corner lots. Second, the court rejected landowner's argument that the association had waived its right to enforce the covenant by failing to object, in 2003 or 2004, to construction of two single-family homes on 50 foot lots across from landowner's parcel. The court noted that the number of homes not in compliance with the covenant's restrictions is insignificant ' only 1.5% in the entire covenant area, and 5 percent within the area in which landowner's parcel is located. Moreover, the court found no evidence that any corner lots were out of compliance. As a result, the court concluded that the association was entitled to injunctive relief.

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Evidence Insufficient to Establish That Easement Holder Had Right to Build Driveway

Shuttle Contracting Corp. v. Peikarian

NYLJ 7/9/13, p. 27, col. 6

AppDiv, Second Dept.

(memorandum opinion)

'

In a declaratory judgment action by owner of a roadway against holder of an easement, roadway owner appealed from Supreme Court's dismissal of the complaint. The Appellate Division reversed, holding that the documentary evidence presented by easement holder did not establish conclusively that easement holder had a right to build a driveway to connect to the road.

Roadway owner owns a private road which is, in most places, 30 feet wide. Only a 12- to 13-foot wide portion of the roadway is actually paved. In 1950, owners of abutting land were granted an easement of ingress and egress over the road. Current holder of the easement owns an abutting parcel that has been subdivided into three building lots. One of those lots abuts the roadway in an area where the private road is wider than 30 feet (the “bulge” area). Easement holder plans to build a driveway across the bulge area to reach the paved portion of the roadway. Roadway owner brought this action for a declaration that easement holder was not entitled to build the driveway, but Supreme Court dismissed the complaint, relying on the written easement of ingress and egress. Roadway owner appealed.

In reversing, the Appellate Division noted that an easement granted in general terms includes the right to make any reasonable use necessary and convenient for the easement's purpose, so long as the easement holder does not materially increase the burden of the servient estate. In this case, the court held that the written easement did not establish, as a matter of law, that the proposed driveway was necessary and convenient for the easement's purpose, or that the driveway did not materially increase the burden on the servient estate. As a result, documentary evidence was not sufficient to permit dismissal of the complaint.

'

Mortgagee Not Entitled to Foreclose Without Proof That It Was Holder of Underlying Note

Homecomings Financial, LLC v. Guldi

NYLJ 7/9/13, p. 28, col. 1

AppDiv, Second Dept.

(memorandum opinion)

'

In a mortgage foreclosure action, mortgagor appealed from Supreme Court's award of summary judgment to mortgagee. The Appellate Division reversed and awarded summary judgment to mortgagor, relying on the absence of evidence that the mortgagee, at the time the foreclosure proceeding was brought, was the holder of the note underlying the mortgage.

In 2004, Guldi executed an adjustable rate note and mortgage in favor of Greenpoint Mortgage. The mortgage instrument identified Mortgage Electronic Registration Systems, Inc. (MERS) as the “nominee” for Greenpoint. The following year, MERS brought this foreclosure action as nominee for Greenpoint. Then, in 2006, MERS purported to assign the mortgage instrument to current mortgagee, Homecomings. The same month, Guldi died and his son was appointed administrator of the estate. In 2008, Supreme Court amended the caption by substituting Homecomings and the administrator as parties to the proceeding. When Homecomings filed an amended complaint, Guldi's administrator contended that Homecomings lacked standing to bring the foreclosure action. Supreme Court nevertheless awarded summary judgment to mortgagee, and mortgagor appealed.

In reversing, the Appellate Division emphasized that a mortgagee has standing to bring a foreclosure action only when it is the holder or assignee of both the mortgage and the underlying note at the time the foreclosure action is commenced. In this case, Homecomings failed to submit any evidence that the note was physically delivered to MERS before commencement of the foreclosure action, or that Greenpoint had assigned the note to MERS before commencement. As a result, even if MERS assigned the note to Homecomings during the course of the action, that assignment would not establish Homecomings' right to the note, because MERS could not transfer more than it had. The court therefore awarded summary judgment to the administrator dismissing the complaint, without prejudice.

'

Neighbor Liable for Damages Caused by Excavation Work

East 77 Owners Co v. King Sha Group

NYLJ 7/17/13, p. 21, col.1

Supreme Ct., N.Y. Cty.

(Schoenfeld, J.)

In an action by landowner for damages caused by a neighbor's excavation work, both parties sought judicial resolution of neighbor's liability and the amount of damages. The court held that neighbor was liable for construction costs, lost rent and professional fees, but not increased insurance premiums or interest on a construction loan.

Neighbor owned a parking garage adjacent to landowner's apartment building. Neighbor began excavation work to create a sub-basement level in its garage, and hired various contractors and subcontractors. The New York City Department of Buildings (DOB) issued a notice of violation stating that neighbor had violated the Administrative Code by failing to properly carry out excavation work at more than 10 feet below grade. DOB ordered a stoppage of work. When neighbor challenged DOB's violation notices, and administrative law judge found that neighbor's lack of structural support had created a dangerous condition. As a result of the excavation, landowner suffered structural damage its building, requiring relocation of all tenants for four years while repairs were made, including underpinning, shoring, and other support work. Landowner then brought this action for damages against neighbor, its general contractor, its foundation subcontractor, and two other entities. The parties, other than the foundation subcontractor, reached a partial settlement that resulted in a release from liability for all parties other than the neighbor and the foundation subcontractor.

In adjudicating landowner's claims against neighbor, the court started by holding that under the New York City Administrative Code, excavation undertaken at a depth of more than ten feet becomes strictly liable for any damages proximately caused to an adjacent building. Based on the code provision, the court held that neighbor was liable for more than $1.5 million in construction costs, more than $750,000 in lost rent, and nearly $375,000 in professional fees. But the court also held that neighbors were not liable for increased insurance premiums paid after the damage was done, or for the closing costs and interests incurred by landowner in the course of borrowing money to do the necessary construction work. The court also awarded neighbor a default judgment on its crossclaim against the foundation subcontractor.'

'

'

Lot Size Covenant Binding Because It Continues to Benefit Neighbors

BFHA v. Eastern NY Enterprises

NYLJ 7/31/13

Supreme Ct., Queens Cty.

(Lebowitz, J.)

'

Homeowners Association sought a permanent injunction against subdivision of a corner lot for the purposes of building two single-family homes. The court granted the injunction, holding that a lot size covenant was binding on the landowner proposing the subdivision.

In 2010, landowner paid $1,050,000 for a corner parcel located at 163rd Street and 35th Avenue in Queens. The parcel measured 120-feet wide by 100-feet deep. Landowner's objective was to subdivide the parcel into two building lots, both of which would comply with New York City zoning laws. The area, however, is subject to a restrictive covenant, created in 1909, which requires houses on corner lots to have a minimum width of 80 feet, and other houses to have a minimum width of 60 feet, leaving the parcel 20 feet too narrow to permit two houses in conformity with the zoning ordinance. The homeowners association brought this action to enforce the covenant, and to enjoin the subdivision.

In granting the injunction, the court first rejected landowner's argument that the association lacked standing to enforce the covenant. The court then turned to landowner's argument that the covenant no longer generated substantial benefit because a variety of homes, including apartment houses, are on the same block as landowner's parcel.

First, the covenant itself permitted apartment houses and two family houses at the same time it imposed lot size restrictions on corner lots. Second, the court rejected landowner's argument that the association had waived its right to enforce the covenant by failing to object, in 2003 or 2004, to construction of two single-family homes on 50 foot lots across from landowner's parcel. The court noted that the number of homes not in compliance with the covenant's restrictions is insignificant ' only 1.5% in the entire covenant area, and 5 percent within the area in which landowner's parcel is located. Moreover, the court found no evidence that any corner lots were out of compliance. As a result, the court concluded that the association was entitled to injunctive relief.

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