Real Property Law

AppDiv, First Dept.

(memorandum opinion)

On developer's petition for a license to enter adjoin property in order to make improvements on its own property, adjoining property owner appealed from Supreme Court's denial of a monthly license fee, and developer cross-appealed from Supreme Court's requirements that developer post a bond. The Appellate Division modified and remanded to Supreme Court to determine an appropriate monthly license fee.

Developer had acquired development rights over adjoining owner's land. In the course of developing the site, developer sought a license, pursuant to RPAPL section 881, to enter the adjoining site. Supreme Court granted a three-year license, but postponed any determination of an appropriate fee for the license until the expiration of the three-year period. Supreme Court also directed that developer post a $750,000 bond to cover any potential damages to adjoining landowner.

In modifying, the Appellate Division first held that adjoining landowner was entitled to a contemporaneous license fee, noting that developer's interference will reduce the value of adjoining landowner's property during the license period. The court explicitly held that payment to the adjoining landowner for air rights did not eliminate adjoining landowner's right to a fee for the license. The court then held that a bond was appropriate, even though adjoining landowner was covered by developer's insurance. Because the bond was to secure both possible damages and the payment of the postponed license fee, the court suggested that on remand, Supreme Court might be required to adjust the size of the bond in light of the requirement of a monthly license fee.

COMMENT

Section 881 of RPAPL permits a court to grant a license to a developer to enter an adjoining landowner's property, but only if the developer is able to justify entry by presentation of facts showing necessity to enter. In McMullan v. HRH Const., LLC, 38 A.D.3d 206, 207, the First Department denied the developer's request for a license under RPAPL ' 881 after he left construction materials and debris upon the adjoining landowner's property, obstructed an exit on the landowner's property, and removed the landowner's fences. Id. at 206. The court found the developer's claimed entitlement to a license to be “risible,” as his request for a license was a response to the adjoining landowner's nuisance claim, and failed to present facts showing the necessity to enter. Id . at 207. Further, RPAPL ' 881 applies only in cases where the developer is seeking entry, not when developer seeks to make changes to a neighbor's parcel. Thus, in AREP Fifty-Seventh, LLC, v. PMGP Associates, L.P., 101 A.D.3d 440, 441 the First Department denied a license because the developer sought not entry onto adjoining land, but rather the removal of the adjoining landowner's five-foot section of a sidewalk bridge in order to erect a crane for a project. Id. at 441.

Once a developer establishes a need to enter, a court is more likely to conclude that grant of the license is reasonable when the inconvenience to the adjoining landowner is temporary rather than permanent. For instance, in Rosma Dev., LLC v. S., 5 Misc. 3d 1014(A), the court granted a license to erect scaffolding on a neighbor's property, even though the scaffolding would delay neighbor's own efforts to complete improvements on his property. The court awarded the neighbor $2,500 per month as a license fee to compensate for the temporary inconvenience. By contrast, in Foceri v. Fazio, 61 Misc. 2d 606, 608, the court denied a license to install aluminum siding that would encroach by one inch on a neighbor's lot, holding that RPAPL ' 881 did not authorize the license, and that the requested license would be contrary to “elementary principles of equity.”

While multiple trial courts, like the court in Rosma Development, have imposed a license fee under RPAPL ' 881, one trial court has held that RPAPL ' 881 does not authorize a license fee. N. 7-8 Inv'rs, LLC v. Newgarden, 43 Misc. 3d 633, 625, illustrates the more common approach. The court imposed a license fee of $3,500 per month on the developer to compensate the adjoining landowner for the loss in enjoyment of a roof deck ' the landowner's only outdoor recreational space ' which developer planned to cover with a cantilevered balcony during the construction period. According to the court, recovery for actual damages and license fees compensate two entirely different injuries to an adjoining landowner, and therefore should be awarded separately, despite the statute's failure to explicitly mention a license fee. On the other hand, the court in 10 East End Owners Inc. v. Two East End Ave Apartment Corp., 35 Misc.3d 1215(A) refused to impose a license fee upon the developer, reasoning that RPAPL ' 881's explicit mention of damages, but not license fees, should be read to preclude issuance of license fees, and to limit a neighbor to recovery of damages. In DDG Warren LLC, the court adopted the approach of N. 7-8 Inv'rs, LLC, holding that RPAPL ' 881 indeed warrants the imposition of a license fee in circumstances where justice so requires.

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Language in Sale Contract Precludes Application of Merger Doctrine

Polsky v. 145 Hudson Street Associates, L.P.

NYLJ 5/4/16, p. 26, col. 4

AppDiv, First Dept.

(memorandum opinion)

In a breach of contract action by purchaser against sponsor, sponsor appealed from Supreme Court's denial of its summary judgment motion. The Appellate Division affirmed, holding that language in the sale contract barred application of the merger doctrine.

The purchase agreement for the subject apartment incorporated the offering plan, which stated that purchaser's apartment would be configured as shown in attached floor plans. Those plans showed two entrances, and did not include a mechanical room in the apartment. The apartment actually conveyed required the addition of a mechanical room, which precluded a second entrance. After closing, purchaser brought this breach of contract action, and sponsor moved to dismiss. Supreme Court denied the motion.

In affirming, the Appellate Division first held that questions of fact remained about whether sponsor had breached by conveying an apartment that required a mechanical room and precluded two entrances, and also about whether the requirement of a mechanical room and the preclusion of a second entrance constituted “permitted encumbrances” within the meaning of the sale contract. The court then held that the merger doctrine did not bar purchaser's claim because the sale contract provided that “nothing herein contained shall excuse [sponsor] from performing those obligations (if any) in the [Offering Plan] to be performed subsequent to the closing.” That language, the court held, brought the contract within the exception to the merger doctrine for situations in which the parties intend that certain provisions would survive delivery of the deed.

COMMENT

The merger doctrine holds that once a seller has delivered a deed, the deed's terms are all that survive closing and the purchaser is barred from suing for breach of the sale contract, unless the parties demonstrate intent for a provision from the sales contract to survive. In Arnold v. Wilkins, 61 A.D.3d 1236, the Third Department applied the merger doctrine to bar purchaser's claim, brought months after closing, for breach of a sale contract provision requiring that the sewage disposal system be “in good working order as of the date of closing.” The court held that the contract language indicated no intent for the provision to survive closing. By contrast, the merger doctrine does not bar suit for breach of contract when the sales contract explicitly provides that a contract provision should survive delivery of the deed. In Slezak v. Stewart's Shops Corp., 133 A.D.3d 1179, the Third Department held that the intent of the parties to avoid merger was clear because a provision in the original sales agreement explicitly stated that the requirement to pay the agreed upon purchase price would survive closing. Id. at 1179. See also Sicignano v. Dixey, 124 A.D.3d 1301.

New York courts have extended this exception to the merger doctrine in cases where no explicit provision in the sales contract provides for survival, but where the parties' intent that a contract claim survive can be established by implication. In Cerand v. Burstein, 72 A.D.3d 1262, the Third Department held that the merger doctrine was inapplicable because the parties made an oral agreement at the time of closing to extend a certain provision from the sales contract, and the parties' conduct following such provision supported the claim that the parties intended for the provision to survive. Id. at 1262. The court in Polsky applied this implied intent exception .

New York courts have additionally held the merger doctrine inapplicable to fraud claims. The court in Sicignano v. Dixey, 124 A.D.3d 1304, while also relying on express language in the sale contract, alternatively based its decision on the fraud exception: In Sicignano, t he court found the merger doctrine inapplicable, as the defendant seller fraudulently misrepresented that there had been no previous water damage to the property, despite the multiple cases of previous water damage so obvious that neighbors had noticed. Id. at 1303. See also Schooley v. Mannion, 241 A.D.2d 677.

One Second Department case has, without relying on the fraud exception, found the merger doctrine inapplicable where, after closing, the purchaser discovered latent defects which were discoverable only after the purchaser occupied the premises. In Fehling v. Wicks, 179 Misc.2d 1041, the court found the merger doctrine inapplicable to a buyer's breach of contract claim when the buyer discovered defects in faucet handles preventing shut off of water, noting that the defects were not observable during inspection prior to the purchase of the property.

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Questions of Fact Preclude Summary Judgment on Use of Reciprocal Easement

Hofmann v. Delbeau

NYLJ 5/13/16, p. 31, col. 6

AppDiv, Second Dept.

(memorandum opinion)

In an action to enjoin interference with a reciprocal easement, defendant neighbors appealed from Supreme Court's award of summary judgment to plaintiff. The Appellate Division reversed, holding that questions of fact precluded summary judgment.

Plaintiffs and defendants own neighboring attached homes. Their deeds each include reciprocal easements for rights of way over a common driveway located behind the houses. The deeds specify that the easements are only for ingress and egress. In 2013, plaintiff landowners brought this action contending that defendant landowners parked their car on the easement in a manner that blocked plaintiffs' access to their property and interfered with their use of the right of way. Supreme Court awarded summary judgment to plaintiff landowners.

In reversing, the Appellate Division conceded that plaintiff landowners had established a prima facie entitlement to judgment by submitting an affidavit and the deed containing the easement language. The court then held, however, that defendant landowners had raised triable issues of fact by contending that although they parked their car in a sideway manner on the driveway, they did not prevent plaintiff landowners from using the right of way or obtaining access to their property.

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