Real Property Law

In reversing, the Appellate Division first held that Supreme Court had erred in holding that the association's claim was time-barred because BSSG had breached the covenant by failing to construct the walkway within 60 days of the contract date. The court concluded that the contract did not require construction within 60 days, but required only delivery of plans and specifications within that period. Although BSSG did not deliver those plans, the court held that given the broad scope of the project, failure to deliver the plans was not sufficiently substantial to trigger the running of the statute of limitations on a claim for breach of the walkway covenant. The court then noted that in 2002, upon the closing of the contract with BSSG, the homeowners association recorded an amendment to the declaration of covenants providing that the covenants in the agreement with BSSG, whether affirmative or negative in nature, shall constitute covenants running with the land. The court held that the walkway covenant satisfied all of the requirements for covenants running with the land – intent, touch and concern, and privity. As a result, homeowners association was entitled to summary judgment declaring that the covenant runs with the land.

Comment

Since the Court of Appeals, in Neponsit Prop. Owner's Assn' v. Emigrant Indus. Sav. Bank, 278 N.Y. 248, abandoned the pre-existing blanket rule that affirmative covenants do not run with the land, New York courts have held that affirmative covenants will in fact bind successor owners when they “touch and concern” the land.

Where an affirmative covenant requires performance of a single, one time act of restoration or installation, and the previous owner fails to perform the act prior to transferring the land to a subsequent purchaser, courts routinely enforce the covenant against the subsequent owner, finding that the covenant touches and concerns the land. For example, in City of New York v. Delafield 246 Corp., 236 A.D.2d 11, 25 the First Department held that covenants to preserve and replace trees, restore terrain surrounding an unbuilt garage, restore a mansion located on the property, and install a fire alarm system were binding on the successor owner. The court held that the subsequent purchaser, performing the same construction project as its predecessor, was not entitled to benefit from the previous owner's failure to complete the acts that specifically concerned the status of the land, especially since once these one-time acts were completed, the duty of the covenantor was fulfilled. Id. at 27.

In cases where the covenant imposes a continuing obligation on the covenanter, courts are more likely to bind subsequent owners if the performance of the obligation is something that any pair of landowners would want to continue without renegotiating each time the land is transferred, but not when the covenant's benefit depends on the preferences of particular landowners. For example, in Harrison v. Westview Partners, LLC, 79 A.D. 3d 1198, 1202, the Third Department found that a covenant to provide and maintain a water line was binding on the subsequent owner since the covenantee plaintiffs could not receive water on their properties any other way and since the use of their lots was fully dependent on the maintenance of that water line. Similarly, in Nicholson v. 300 Broadway Realty Corp., 7 N.Y 2d at 246, the Court of Appeals found that a covenant to furnish steam heat and maintain all necessary steam pipes was binding on subsequent purchasers as long as the covenatee's building required heat and the coventantor's heat producing facilities operated on the land. By contrast, in Eagle Enters v. Gross, 39 N.Y.2d 505, the Court of Appeals held that a covenant to provide a seasonal water supply was not binding on the subsequent owner, because unlike the supply of water in Harrison or the supply of steam heat in Nicholson, there was no evidence that the covenantees would be deprived of water without the additional supply, or that they needed the additional supply for those six months.

When a covenant, either restrictive or affirmative, runs with the land, a foreclosure sale generally will have no effect on the status of the covenant and will therefore not act to extinguish it. Courts have explicitly stated that restrictive covenants will not be cut off by a foreclosure sale because such covenants are easements. See, Malley v. Hanna, 101 A.D. 2d 1019 (1984); see also, Halpin v. Poushter, 59 N.Y.S.2d 338 (Sup. Ct. 1945) While there is no similarly explicit rule regarding the survival of affirmative covenants in foreclosure sales, courts have held that when an affirmative covenant runs with the land, the covenant will not be extinguished by a foreclosure sale, as long as the purchaser had notice of the covenant. See, Neponsit Prop. Owner's Assn', 278 N.Y. 248 (affirmative covenant to pay fee for maintenance ran with the land and was not extinguished when defendant purchased land at judicial sale); see also, City of New York, 236 A.D.2d 11, 26 (affirmative covenant survived when subsequent purchaser had actual and constructive notice of the covenant when it purchased the property at a foreclosure sale).

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Post-Sandy FEMA Height Requirements Might Make Restrictive Covenant Unenforceable

Quinto v. Diamond NYLJ 2/20/19, p. 21, col. 2 Supreme Ct., Nassau Cty (Diamond, J.)

In an action to enforce a restrictive covenant, beneficiary of the covenant sought a preliminary injunction against violation of the covenant. The court denied the preliminary injunction, holding that the beneficiary had not shown that the covenant would ultimately be held enforceable, or that a preliminary injunction was necessary to prevent irreparable harm.

Beneficiary's parents owned two adjacent parcels. In 2005, when they sold one of the parcels, they imposed a restrictive covenant on that parcel limiting the height of any housing structure on the parcel. Nevertheless, purchasers proceeded to build a second floor on the house with a full dormer, in violation of the restrictive covenant. Beneficiary brought suit, and in April 2012, Supreme Court held that the second floor violated the covenant and needed to be taken down. Six months later, however, Superstorm Sandy destroyed the entire building. The owners of the burdened party then sold the property to New York State pursuant to a deed that did not mention the restrictive covenant. The burdened property was then sold to current owners, also pursuant to a deed that did not mention the restrictive covenant. Beneficiary of the covenant alleges, however, that current owners were made aware of the covenant at the time of transfer. In light of Sandy, however, FEMA (the Federal Emergency Management Agency) required elevation of housing to new levels as a condition of federal funding. The new requirements would make it difficult for the owners of the burdened parcel to qualify for funding without violating the restrictive covenant.

The Beneficiary then brought this action against both the burdened owner and the village seeking to prevent the owner from building in violation of the covenant and to prevent the village from approving construction in violation of the covenant. Beneficiary sought a preliminary injunction. The court dismissed the claim against the village in its entirety, holding that issuance of a permit for a use allowed by a zoning ordinance may not be denied because the use would violate a restrictive covenant. The court then denied the preliminary injunction, indicating that, despite the 2012 judgment against the prior owner, subsequent events might make the covenant unenforceable as violative of public policy because enforcement of the covenant might prevent all future buyers from building a home on the property. Moreover, the court concluded that the beneficiary had not demonstrated that failure to issue the preliminary injunction would cause irreparable harm, noting that if the covenant were ultimately enforced, the cost of removal would be borne by the burdened owners, not by the covenant's beneficiary.

Comment

As a general matter, landowners need to comply with both “public” laws, such as zoning, as well as private covenants. A use permitted by zoning regulations may still be enjoined if it violates a restrictive covenant. Friends of Shawangunks, Inc. v. Knowlton, 64 N.Y.2d 387.

When there is a clash between a private restrictive covenant and a public law, the covenant will remain enforceable so long as enforcement would not pose a direct conflict with public policy. In Chambers v. Old Stone Hill Rd. Assocs., 1 N.Y.3d 424, the Court of Appeals upheld an injunction against maintenance of a cell phone tower that would violate a restrictive covenant limiting construction on the lot at issue to single family homes. The court rejected the argument that the covenant conflicted with the public policy embodied in the Telecommunications Act of 1996 (TCA), which makes it unlawful for state and local governments engage in regulation that would effectively prohibit the provision of wireless services, 47 U.S.C §332 [c] [7] [B] [i] [II]. The court concluded that the covenant did not violate public policy because even though the town had found that the lot was the best location for a cell tower, (and the tower had already been built), other sites were available for cell phone facilities that would provide cell phone service within the town.

By contrast, when a law evidences intent to specifically preempt otherwise valid restrictions, courts will not enforce the covenants. In Crane Neck Ass'n v. N.Y.C./Long Island Cty. Servs. Grp., 61 N.Y.2d 154, the Court of Appeals affirmed the Second Department's reversal of an injunction against operation of a residence for mentally disabled persons, holding that enforcing a restrictive covenant limiting buildings to single family dwellings would contravene a “long-standing public policy.” N.Y. Mental Hyg. Law §41.34 (f) stated “a community residence established pursuant to this section and family care homes shall be deemed a family unit, for purposes of local laws and ordinances.” The court held that enforcement of the restrictive covenant would frustrate the purpose of the law — to place developmentally disabled persons in supervised residences within residential neighborhoods.