Development

Landowner purchased a site previously used as an oil storage facility and, in 2008, sought a zoning amendment to permit development of a 172-unit waterfront condominium project. The town board approved the amendment, but imposed a declaration of restrictive covenants that required landowner to sell all of the units as condominiums, while permitting subsequent owners to lease them. Two years later, at landowner's request, the town modified the restriction to permit landowner to lease up to 17 of the units for five years or until the delivery of title to the 155th unit, whichever came first. In 2013, landowner sought a further modification allowing it to sell 32 units and retain the other 140 units as rentals. The town denied the application. In this action, landowner challenged the denial, and Supreme Court remitted the matter to the Town Board for further proceedings. Both parties appealed.

In modifying the grant landowner's summary judgment motion, the court relied on RPAPL 1951(1), which provides that a restrictive covenant shall not be enforced if it appears that the restriction is of no actual and substantial benefit to the persons seeking its enforcement. The court concluded that developer had made a prima facie showing that the covenant was of no actual and substantial benefit to the town, and noted that the town had offered no evidence to rebut that showing. As a result, landowner was entitled to a declaration that the covenant was unenforceable.

COMMENT

Although there is little authority for invoking RPAPL § 1951 to extinguish covenants imposed by governmental bodies, courts have extinguished covenants negotiated between private parties, but they have generally done so only in two circumstances: first, when the burdened land would otherwise have no economically productive use, and second, when enforcement of the covenant would generate a windfall for the benefited party. Orange & Rockland Utils. v Philwold Estates, 52 NY2d 253, illustrates the first circumstance. The Court of Appeals affirmed the removal of a covenant limiting use of the property to construction of a hydroelectric plant when the City of New York condemned the servient party's riparian rights, making use of the property as a hydroelectric plant impossible. In addition to noting the hardship on the servient party, the court concluded that the dominant party had not sufficiently demonstrated actual and substantial benefits.

Birt v Ratka, 66 AD3d 1363, illustrates judicial willingness to remove a covenant when enforcement would provide a windfall for the benefited owner. The Fourth Department extinguished a covenant that prohibited a landowner who held a right of way across his neighbor's land from subdividing its property into two lots when, at the time the covenant was imposed, four dwellings were located on the land burdened by the covenant. Because four homes were entitled to use the right of way when the covenant was imposed, the court rejected the neighbor's argument that removal of the covenant would overburden the right of way. Enforcing the covenant would have left the benefited neighbor in a better position than when the covenant was first imposed.

Modern Apartment House Is Not a Tenement Within Meaning of Restrictive Covenant East 62nd Street Association, Inc. v. 163-165 East 62nd Street Associates, LLC, NYLJ 9/29/16 Supreme Ct., N.Y. Cty (Bannon, J.)

Neighborhood association sought a preliminary injunction in its action to enjoin developer from building a five-unit condominium apartment building on a neighboring site. Supreme Court denied the preliminary injunction, concluding that the association had failed to establish a likelihood of success on the merits of its claim to enforce a restrictive covenant.

Developer sought to demolish two four-story buildings on East 62nd Street, and to replace them with a single six-story building across the two building parcels. The new building would include six condominium apartments. Developer has sought approvals from the Department of Buildings (DOB). In this action, a neighborhood preservation group sought to enjoin further construction, alleging that the new building would violate a restrictive covenant created by one of developer's predecessors in interest in 1869. The covenant precluded use of the parcel for a tenement house. The association also contended that the developer had made numerous misrepresentations in its application to DOB.

In denying the association's application for a preliminary injunction, the court concluded that the association had not demonstrated a likelihood of success on the merits. The court cited Kitching v. Brown, 180 NY 414, a 1905 Court of Appeals case, for the proposition that a modern apartment house does not constitute a tenement house for purposes of construing a restrictive covenant. Although modern apartment houses fit the definition of tenement house in the 1867 statutes, those statutes were enacted before the concept of the modern apartment house had developed, and the evils associated with tenement houses do not arise with modern apartment houses. The court then turned to the alleged misrepresentations to the DOB, and concluded that on that issue, the association had not exhausted its administrative remedies, and should seek relief from the DOB itself.

Town-Imposed Restrictive Covenant Held Unenforceable

Blue Island Development, LLC v. Town of Hempstead, NYLJ 10/7/16, p. 27, col. 6 AppDiv, Second Dept. (memorandum opinion)

In an action for a judgment declaring a restrictive covenant unenforceable, both the landowner and the town appealed from Supreme Court's denial of their respective summary judgment motions. The Appellate Division modified to grant landowner's motion, and to declare the covenant unenforceable.

Landowner purchased a site previously used as an oil storage facility and, in 2008, sought a zoning amendment to permit development of a 172-unit waterfront condominium project. The town board approved the amendment, but imposed a declaration of restrictive covenants that required landowner to sell all of the units as condominiums, while permitting subsequent owners to lease them. Two years later, at landowner's request, the town modified the restriction to permit landowner to lease up to 17 of the units for five years or until the delivery of title to the 155th unit, whichever came first. In 2013, landowner sought a further modification allowing it to sell 32 units and retain the other 140 units as rentals. The town denied the application. In this action, landowner challenged the denial, and Supreme Court remitted the matter to the Town Board for further proceedings. Both parties appealed.

In modifying the grant landowner's summary judgment motion, the court relied on RPAPL 1951(1), which provides that a restrictive covenant shall not be enforced if it appears that the restriction is of no actual and substantial benefit to the persons seeking its enforcement. The court concluded that developer had made a prima facie showing that the covenant was of no actual and substantial benefit to the town, and noted that the town had offered no evidence to rebut that showing. As a result, landowner was entitled to a declaration that the covenant was unenforceable.

COMMENT

Although there is little authority for invoking RPAPL § 1951 to extinguish covenants imposed by governmental bodies, courts have extinguished covenants negotiated between private parties, but they have generally done so only in two circumstances: first, when the burdened land would otherwise have no economically productive use, and second, when enforcement of the covenant would generate a windfall for the benefited party. Orange & Rockland Utils. v Philwold Estates, 52 NY2d 253, illustrates the first circumstance. The Court of Appeals affirmed the removal of a covenant limiting use of the property to construction of a hydroelectric plant when the City of New York condemned the servient party's riparian rights, making use of the property as a hydroelectric plant impossible. In addition to noting the hardship on the servient party, the court concluded that the dominant party had not sufficiently demonstrated actual and substantial benefits.

Birt v Ratka, 66 AD3d 1363, illustrates judicial willingness to remove a covenant when enforcement would provide a windfall for the benefited owner. The Fourth Department extinguished a covenant that prohibited a landowner who held a right of way across his neighbor's land from subdividing its property into two lots when, at the time the covenant was imposed, four dwellings were located on the land burdened by the covenant. Because four homes were entitled to use the right of way when the covenant was imposed, the court rejected the neighbor's argument that removal of the covenant would overburden the right of way. Enforcing the covenant would have left the benefited neighbor in a better position than when the covenant was first imposed.

Modern Apartment House Is Not a Tenement Within Meaning of Restrictive Covenant East 62nd Street Association, Inc. v. 163-165 East 62nd Street Associates, LLC, NYLJ 9/29/16 Supreme Ct., N.Y. Cty (Bannon, J.)

Neighborhood association sought a preliminary injunction in its action to enjoin developer from building a five-unit condominium apartment building on a neighboring site. Supreme Court denied the preliminary injunction, concluding that the association had failed to establish a likelihood of success on the merits of its claim to enforce a restrictive covenant.

Developer sought to demolish two four-story buildings on East 62nd Street, and to replace them with a single six-story building across the two building parcels. The new building would include six condominium apartments. Developer has sought approvals from the Department of Buildings (DOB). In this action, a neighborhood preservation group sought to enjoin further construction, alleging that the new building would violate a restrictive covenant created by one of developer's predecessors in interest in 1869. The covenant precluded use of the parcel for a tenement house. The association also contended that the developer had made numerous misrepresentations in its application to DOB.

In denying the association's application for a preliminary injunction, the court concluded that the association had not demonstrated a likelihood of success on the merits. The court cited Kitching v. Brown , 180 NY 414, a 1905 Court of Appeals case, for the proposition that a modern apartment house does not constitute a tenement house for purposes of construing a restrictive covenant. Although modern apartment houses fit the definition of tenement house in the 1867 statutes, those statutes were enacted before the concept of the modern apartment house had developed, and the evils associated with tenement houses do not arise with modern apartment houses. The court then turned to the alleged misrepresentations to the DOB, and concluded that on that issue, the association had not exhausted its administrative remedies, and should seek relief from the DOB itself.