Real Property Law

Option holder owned a 15.94-acre parcel and, in 2002, sold the parcel to buyers. As part of the deal, buyers agreed to reconvey a 3.5-acre portion of the property to option holder at the latter's request within a 10-year period. The agreement, which was binding on the parties' heirs and assigns, was duly recorded. In 2005, buyers conveyed the entire 15.94- acre parcel to the LaPortes, subject to all restrictions of record. In 2011 — within the 10-year option period — option holder advised the LaPortes that it was exercising its option. The LaPortes nevertheless conveyed the entire parcel to Roundabout, the current title holder. Option holder again exercised its option and demanded reconveyance of the 3.5-acre parcel. When Roundabout refused, option holder brought this action for specific performance. Supreme Court awarded specific performance, and Roundabout appealed.

In affirming, the Appellate Division rejected Roundabout's claim that option holder's right to exercise its option was conditioned on its preparation of all of the instruments necessary for recording the deed. A deed to the option holder would not be recordable because recording would require subdivision approval. The court majority, however, emphasized that the option agreement did not require option holder to obtain subdivision approval, nor did it provide that failure to obtain subdivision approval would void the deed. Although the agreement did require the option holder to prepare, at its own expense, the deed and “such other instruments necessary for recording,” the court's majority did not treat that requirement as a condition of the obligation to reconvey. Accordingly, the majority held that option holder was entitled to specific performance. Justice Devine, dissenting, would have denied specific performance because of option holder's inability to prepare and record the deed and other documents.

COMMENT

Real Property Law §§ 333 (1-e)(ii)(7) and (8) provide that a deed to a portion of a parcel owned by a transferor is not recordable unless it includes a transfer report form, which includes a statement that subdivision of the parcel has either been approved or is not required. This provision became effective in 1994, the year after the Court of Appeals had held, in Voorheesville Rod and Gun Club, Inc. v. E.W. Tompkins Company, Inc., 82 N.Y.2d 564, that a seller's failure to obtain a required subdivision approval does not render ta itle unmarketable. In Voorheesville, the sale contract covered a portion of the land owned by seller, and required the seller to deliver marketable title. When purchaser's bank declined to close on the loan unless seller obtained the subdivision approval required by local regulations, purchaser informed the seller that failure to obtain subdivision approval had rendered title unmarketable. When purchaser then brought an action for specific performance, the Court of Appeals reversed the lower court's decision to compel the seller to specifically perform his end of the contract and apply for subdivision approval. Id. The court reasoned that the subdivision regulations were akin to zoning ordinances, and noted that zoning ordinances do not impact marketability of title. Id. Because no provision in the contract required the seller to obtain subdivision approval, the court held that failure to obtain such approval, though required by the town's regulations, did not render title unmarketable. Id.

At the time of the sale contract in Voorheesville, and even at the time of the court's decision, no statute prohibited recording a deed to a portion of a transferor's lot. As a result, the buyer (or a mortgagee) would have been able to protect itself against subsequent purchasers by recording. Under the current statute, however, a buyer would be unable to obtain protection against subsequent purchasers. Whether the Court of Appeals would have decided Voorheesville the same way today, and how it would decide Tomhannock, is an open question.

Questions of Fact Remain About Association's Right To Collect Fines

Minkin v. Board of Directors of the Cortlandt Ridge Homeowners Association, Inc. NYLJ 4/6/17, p. 29, col. 4 AppDiv, Second Dept. (memorandum opinion)

In an action by homeowners against a homeowners association seeking damages for breach of fiduciary duty and a declaration that the association is not entitled to perform landscaping services, homeowners appealed from Supreme Court's grant of declaratory relief in favor of the association and dismissal of the remainder of homeowners' claims. The Appellate Division modified to restore homeowners' claims seeking to enjoin collection of fines for landscaping their property, holding that questions of fact remained with respect to those claims.

Homeowners own a single-family home in a community where a declaration of covenants created a homeowners association and authorized the association's board to provide for landscaping services in the front portions of properties of single-family homeowners, and to charge homeowners for those services. The declaration also provided that homeowners could not modify landscaping on their properties without prior written approval of the association board. The board's managing agent retained a landscaping company to provide services, and charged homeowners for those services. Plaintiff homeowners have refused to pay those charges, resulting in the board's assessment of fees and fines. The board also assessed fees and fines on plaintiff homeowners for making landscaping changes without the board's approval. Plaintiff homeowners then brought this action alleging that the board had exceeded its authority. Supreme Court granted a declaration in favor of the board, and otherwise dismissed the claims of plaintiff homeowners. Homeowners appealed.

In modifying, the Appellate Division first upheld Supreme Court's declaration that the board was authorized to provide landscaping services on the front portions of single-family homes and that plaintiff homeowners are required to pay fees and fines assessed against them for those services. But the court then concluded that triable issues of fact remained on two issues. First, the court held that homeowners had raised questions of fact about whether the board had authorized landscaping changes. Second, the court held that homeowners had raised questions of fact about whether the board had assessed fees and fines for landscaping on the side and rear of their property. The court noted that Supreme Court had properly determined that the board's landscaping authority extended only to the front of property within the community. As a result, the court remanded to Supreme Court for resolution of the unresolved fact issues.

Neighbor Entitled to Compensation for License To Use Property to Make Repairs

In re Van Dorn Holdings, LLC v. 152 W. 58th Owners Corp. NYLJ 4/19/17, p. 24, col. 4 AppDiv, First Dept. (memorandum opinion)

In landowner's action seeking a license to use neighbor's land to obtain access to make repairs to landowner's own building, landowner appealed from Supreme Court's award to neighbor of a monthly license fee, a penalty for delays in construction, and attorneys' and engineers' fees. The Appellate Division modified to delete the penalty for delays in construction, but otherwise affirmed, holding that neighbor was entitled to compensation for landowner's intrusion.

Section 881 of the Real Property Actions and Proceedings Law (RPAPL) authorizes an owner to bring a proceeding to obtain a license to enter the land of an adjoining owner when entry is necessary to make improvements and repairs and the adjoining owner has denied permission to enter. Section 881 provides that the court shall grant the license “upon such term as justice requires,” and provides that the licensee shall be liable for actual damages caused during entry, but makes no explicit mention of a license fee. When landowner in this case sought a license to make repairs, Supreme Court granted the license, but imposed a $2,000 monthly license fee from February through September 2016, and a $500 penalty for each day of work past the expiration date of the license. Supreme Court also awarded neighbor engineers' fees and attorneys' fees for review of landowner's proposed repair work. Landowner appealed.

The Appellate Division started by holding that Supreme Court did not abuse its discretion in awarding neighbor a license fee even though the license was necessary for repairs rather than improvements. The court also concluded that the award of attorneys' and engineers' fees was appropriate because neighbor should not have to bear the costs of a design professional to ensure that the work does not endanger its property. The court, however, vacated the daily penalty, concluding instead that neighbors would be allowed to seek a continuation or increase of the $2,000 monthly license fee is the work was not completed on schedule.

COMMENT

In the absence of any appellate authority on the issue, most recent cases have construed the words “as such terms as justice requires” in section 881 of the Real Property Actions and Proceedings Law (RPAPL) as authorizing award of a fee in exchange for a grant of a license to enter or occupy a neighbor's premises. In Ponito Resident LLC v. 12th St. Apt. Corp., 38 Misc.3d 604, a case where the licensee making repairs on his property sought a license to maintain a sidewalk shed in front of a neighbor's parcel, the Supreme Court (New York County) conditioned the license on payment of a license fee of $1,500 per month (for five months). Likewise, in MK Realty Holding, LLC v. Schneider, 39 Misc.3d 1209(A), the Supreme Court (Queens County) granted a license fee of $1,000 as a condition of a 15-day license to erect a scaffold on the licensor's property in order to repair leaky walls of the building on the adjoining property. See also 225 46th Street, LLC. v. Giannoula Hahralampopoulos, 55 Misc.3d 621 (directing the parties to each submit one expert affidavit from a real estate expert as to the value of the use and occupancy of ten feet of a backyard piece of property to determine a license fee). The Supreme Court (Kings County) in North 7-8 Investors, LLC v. Newgarden, 43 Misc.3d 623 concluded that the statute's language authorized an exercise of discretionary authority to award a license fee of $3,500 per month for permitting a cantilevered balcony that protruded six feet into the licensor's airspace and six feet above the licensor's roof deck. The balcony would allow the licensee's workers to complete the facade of a new building on the adjoining property. In awarding $3,500 per month, the court in North 7-8 Investors, LLC cited Ponito and MK Realty Holding LLC, and concluded that the activities pursuant to the license were more intrusive than “a sidewalk shed or scaffold … and will seriously impact the licensor's use and enjoyment of [his] roof deck, which is the licensor's only outdoor recreational space.”

In awarding license fees, these courts have explicitly or implicitly rejected the holding in earlier cases that the express statutory authorization of actual damages should be read to prohibit license fees or other monetary awards. For instance, the court in North 7-8 Investors, LLC declined to follow the court in 10 East End Owners, Inc. v. Two East End Ave Apt Corp., 35 Misc.3d 1215(A) and reasoned that, unlike a damage award, a license fee compensates a licensor-owner for the temporary loss of enjoyment of a portion of its property.

In 10 East End, the Supreme Court (New York County) had held that the language in RPAPL 881 did not warrant an imposition of a license fee, and reasoned that the statute provided for damages yet limited the relief to “actual damages occurring as a result of the entry.” In 10 East End, the court declined to award a license fee for a six-month project to perform repair work on the facade of the licensee's building when the repairs were necessary for the licensee to comply with its obligations pursuant to a New York City ordinance. See also Sunrise Jewish Center of Valley Stream, Inc. v. Lipko, 61 Misc.2d 673 (declining to award a license fee for a five-day project to perform stucco improvement work on the licensee's building).