Development

Developer Cannot Rescind Sale Contract for Impossibility of Performance

RW Holdings, LLC v. Mayer

NYLJ 10/2/15, p. 29, col, 2

AppDiv, Second Dept.

(memorandum opinion)

In buyer-developer's action to rescind a sale contract, developer appealed from Supreme Court's grant of summary judgment to sellers dismissing the complaint and declaring that sellers were entitled to exercise their option to insist on a reconveyance of part of the property for $1, rejecting developer's contention that the sale contract should be rescinded for impossibility of performance.

Sellers contracted to convey the entire parcel they owned to developer in 2003. The contract provided that developer intended to subdivide a portion of the parcel (designated Parcel Two) into at least seven lots. The contract also provided that upon approval of the subdivision, developer would reconvey the parcel on which sellers' home was located (Parcel Three) back to sellers. In the interim, sellers leased Parcel Three from developer. The lease provided that if developer were unsuccessful in its attempt to subdivide Parcel Two, the sellers would have the option to seek to subdivide the property to create a separate lot comprising Parcel Three, and if sellers were successful in obtaining such a subdivision, developer would reconvey Parcel Three to sellers for $1.

In 2003, after execution of the contract and lease, the town enacted a temporary moratorium on subdivision approvals. After several extensions of the moratorium, the town, in 2006, enacted a new zoning code that would make it unlawful to divide Parcel Two into seven building lots. Developer instead proposed an alternate plan that would have divided the entire parcel, including Parcel Three, into 25 lots, but sellers would not approve that plan because it called for development of part of their home site. Developer then brought this action to rescind the contract and restore the parties to the status quo before execution of the contract. Sellers counterclaimed for a judgment declaring that they were entitled to seek a subdivision and, if successful, to compel reconveyance of Parcel Three for $1. Supreme Court granted summary judgment to sellers, and granted them judgment on their counterclaim. Developer appealed.

In affirming, the Appellate Division held that Supreme Court had properly rejected developer's invocation of the impossibility of performance doctrine. The court noted that the doctrine is applicable only if unforeseeable government activities render performance impossible, and held that in this case, developer had failed to rebut sellers' showing that a change in zoning was foreseeable. The court then held that sellers were entitled to a judgment declaring that they are entitled to exercise the leasehold option to seek subdivision of the property.

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Developer Must Provide Community Facilities for Exclusive Use of Residents

Greens at Half Hollow Home Owners Association, Inc. v. Greens Golf Club LLC

NYLJ 9/25/15, p. 30, col. 2 AppDiv, Second Dept.

(memorandum opinion)

In an action by a homeowners association against the developer's successor in interest, both parties appealed from portions of Supreme Court's order granting portions of the parties' respective summary judgment motions. The Appellate Division modified, holding that the association's individual members were entitled to exclusive use of community facilities, but that developer's successors were not subject to assessment for a share of annual expenses incurred in maintaining those facilities.

When developer proposed a residential planned unit development (R-PUD), the town approved the development, amending its zoning ordinance to create a senior residential community subdistrict. In addition to residential dwellings, permitted uses in the subdistrict included community buildings “for the exclusive use of residents of the entire R-PUD and their guests,” and golf courses. Developer submitted a site plan including a building which would serve in part as a community building and in part as a golf course clubhouse. Developer then issued offering plans for condominiums which specified that the golf course and golf club would not be part of the common areas, but that homeowners would be social members of the golf club and required to pay social membership fees for the golf club clubhouse. The declaration of covenants incorporated the obligation to pay membership fees, and bound successors in interest.

Subsequently, the homeowners association brought this action against the developer's successor in interest, contending that the successor in interest, in violation of the zoning ordinance, had been using community building facilities for private parties and events by nonresidents. The association also sought an accounting for the successor in interest's profits from non-resident use, and sought a declaration that the successor in interest is subject to future assessments for common expenses. In addition, the association asked for a declaration that ownership of residential units did not require liability for social membership fees because the covenant to pay fees did not run with the land.

The Appellate Division held that Town Law section 268 afforded the homeowners standing to enforce the zoning ordinance, and that the ordinance did not violate state law by limiting use of the community building, swimming pool and tennis courts, to residents of the senior residential community. As a result, Supreme Court properly granted summary judgment to the homeowners on their claim for exclusive use of those facilities. But the court held that the Town Law did not give the homeowners a claim to recover damages for violation of the zoning ordinance, and also held that the covenant to pay social membership fees was a valid covenant running with the land and binding successor homeowners.

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SEQRA Findings Not Supported by Evidence in the Record

Matter of Falcon Group LLC v. Town/Village of Harrison

NYLJ 10/2/15, p. 2. col. 6

AppDiv, Second Dept.

(memorandum opinion)

In developer's article 78 proceeding challenging the Town Planning Board's SEQRA determination in the context of the planning board's review of a proposed subdivision, the town appealed from Supreme Court's judgment granting the petition and annulling the determination. The Appellate Division affirmed, holding that the board's findings were not supported by evidence in the record.

Developer proposed a subdivision that would create 13 building lots on an undeveloped 14.62-acre parcel. The planning board adopted a positive declaration under SEQRA, citing steep slopes, wetlands, a stream, and subsurface conditions. After public hearings on the developer's draft environmental impact statement, the board adopted a final environmental impact statement (FEIS), which included two alternatives that would have reduced the project's density and many of its environmental impacts. After a public hearing on the FEIS, the board adopted a findings statement concluding that both the proposed action and the alternatives did not minimize environmental impact to the maximum extent possible, and would result in adverse environmental impact. Developer then brought this proceeding, contending that the findings were inconsistent with the FEIS. Supreme Court granted the petition, and the town appealed.

In affirming, the Appellate Division emphasized that an agency's SEQRA findings must be based on factual evidence in the record and not on speculative community objections. Here, the court concluded that the findings statement was based on finding contradicted by the analysis included in the FEIS and not otherwise supported by evidence in the record. The court also noted that the findings statement did not discuss one of the reduced-density alternatives set forth in the FEIS. As a result, the court held that the case was properly remitted to the board for a findings statement consistent with the FEIS.

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Developer Cannot Rescind Sale Contract for Impossibility of Performance

RW Holdings, LLC v. Mayer

NYLJ 10/2/15, p. 29, col, 2

AppDiv, Second Dept.

(memorandum opinion)

In buyer-developer's action to rescind a sale contract, developer appealed from Supreme Court's grant of summary judgment to sellers dismissing the complaint and declaring that sellers were entitled to exercise their option to insist on a reconveyance of part of the property for $1, rejecting developer's contention that the sale contract should be rescinded for impossibility of performance.

Sellers contracted to convey the entire parcel they owned to developer in 2003. The contract provided that developer intended to subdivide a portion of the parcel (designated Parcel Two) into at least seven lots. The contract also provided that upon approval of the subdivision, developer would reconvey the parcel on which sellers' home was located (Parcel Three) back to sellers. In the interim, sellers leased Parcel Three from developer. The lease provided that if developer were unsuccessful in its attempt to subdivide Parcel Two, the sellers would have the option to seek to subdivide the property to create a separate lot comprising Parcel Three, and if sellers were successful in obtaining such a subdivision, developer would reconvey Parcel Three to sellers for $1.

In 2003, after execution of the contract and lease, the town enacted a temporary moratorium on subdivision approvals. After several extensions of the moratorium, the town, in 2006, enacted a new zoning code that would make it unlawful to divide Parcel Two into seven building lots. Developer instead proposed an alternate plan that would have divided the entire parcel, including Parcel Three, into 25 lots, but sellers would not approve that plan because it called for development of part of their home site. Developer then brought this action to rescind the contract and restore the parties to the status quo before execution of the contract. Sellers counterclaimed for a judgment declaring that they were entitled to seek a subdivision and, if successful, to compel reconveyance of Parcel Three for $1. Supreme Court granted summary judgment to sellers, and granted them judgment on their counterclaim. Developer appealed.

In affirming, the Appellate Division held that Supreme Court had properly rejected developer's invocation of the impossibility of performance doctrine. The court noted that the doctrine is applicable only if unforeseeable government activities render performance impossible, and held that in this case, developer had failed to rebut sellers' showing that a change in zoning was foreseeable. The court then held that sellers were entitled to a judgment declaring that they are entitled to exercise the leasehold option to seek subdivision of the property.

'

Developer Must Provide Community Facilities for Exclusive Use of Residents

Greens at Half Hollow Home Owners Association, Inc. v. Greens Golf Club LLC

NYLJ 9/25/15, p. 30, col. 2 AppDiv, Second Dept.

(memorandum opinion)

In an action by a homeowners association against the developer's successor in interest, both parties appealed from portions of Supreme Court's order granting portions of the parties' respective summary judgment motions. The Appellate Division modified, holding that the association's individual members were entitled to exclusive use of community facilities, but that developer's successors were not subject to assessment for a share of annual expenses incurred in maintaining those facilities.

When developer proposed a residential planned unit development (R-PUD), the town approved the development, amending its zoning ordinance to create a senior residential community subdistrict. In addition to residential dwellings, permitted uses in the subdistrict included community buildings “for the exclusive use of residents of the entire R-PUD and their guests,” and golf courses. Developer submitted a site plan including a building which would serve in part as a community building and in part as a golf course clubhouse. Developer then issued offering plans for condominiums which specified that the golf course and golf club would not be part of the common areas, but that homeowners would be social members of the golf club and required to pay social membership fees for the golf club clubhouse. The declaration of covenants incorporated the obligation to pay membership fees, and bound successors in interest.

Subsequently, the homeowners association brought this action against the developer's successor in interest, contending that the successor in interest, in violation of the zoning ordinance, had been using community building facilities for private parties and events by nonresidents. The association also sought an accounting for the successor in interest's profits from non-resident use, and sought a declaration that the successor in interest is subject to future assessments for common expenses. In addition, the association asked for a declaration that ownership of residential units did not require liability for social membership fees because the covenant to pay fees did not run with the land.

The Appellate Division held that Town Law section 268 afforded the homeowners standing to enforce the zoning ordinance, and that the ordinance did not violate state law by limiting use of the community building, swimming pool and tennis courts, to residents of the senior residential community. As a result, Supreme Court properly granted summary judgment to the homeowners on their claim for exclusive use of those facilities. But the court held that the Town Law did not give the homeowners a claim to recover damages for violation of the zoning ordinance, and also held that the covenant to pay social membership fees was a valid covenant running with the land and binding successor homeowners.

'

SEQRA Findings Not Supported by Evidence in the Record

Matter of Falcon Group LLC v. Town/Village of Harrison

NYLJ 10/2/15, p. 2. col. 6

AppDiv, Second Dept.

(memorandum opinion)

In developer's article 78 proceeding challenging the Town Planning Board's SEQRA determination in the context of the planning board's review of a proposed subdivision, the town appealed from Supreme Court's judgment granting the petition and annulling the determination. The Appellate Division affirmed, holding that the board's findings were not supported by evidence in the record.

Developer proposed a subdivision that would create 13 building lots on an undeveloped 14.62-acre parcel. The planning board adopted a positive declaration under SEQRA, citing steep slopes, wetlands, a stream, and subsurface conditions. After public hearings on the developer's draft environmental impact statement, the board adopted a final environmental impact statement (FEIS), which included two alternatives that would have reduced the project's density and many of its environmental impacts. After a public hearing on the FEIS, the board adopted a findings statement concluding that both the proposed action and the alternatives did not minimize environmental impact to the maximum extent possible, and would result in adverse environmental impact. Developer then brought this proceeding, contending that the findings were inconsistent with the FEIS. Supreme Court granted the petition, and the town appealed.

In affirming, the Appellate Division emphasized that an agency's SEQRA findings must be based on factual evidence in the record and not on speculative community objections. Here, the court concluded that the findings statement was based on finding contradicted by the analysis included in the FEIS and not otherwise supported by evidence in the record. The court also noted that the findings statement did not discuss one of the reduced-density alternatives set forth in the FEIS. As a result, the court held that the case was properly remitted to the board for a findings statement consistent with the FEIS.

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