Real Property Law

In reversing, the Appellate Division concluded that the plan did not constitute an unconditional and unqualified acknowledgement of the debt sufficient to reset the statute of limitations. The court concluded that mortgagor had only agreed to make three trial payments in order to receive a permanent modification offer. Because the parties never reached a permanent modification agreement, the plan was not an unconditional acknowledgment of the debt. Similarly, the court concluded that the payments themselves did not constitute an unqualified acknowledgment of the debt because the payments were made for the purpose of reaching an agreement to modify the terms of the agreement. Any promise to pay the remainder of the debt was conditioned on the parties reaching a mutually satisfactory modification. The conditional promise was insufficient to reset the statute of limitations. As a result, mortgagor was entitled to discharge of the mortgage.

Comment

Under General Obligations Law §17-101, either a signed written acknowledgement or a promise by the creditor could revive a time-barred action by the debtor. However, in order to invoke the statute to revive an expired mortgage foreclosure, courts have required both a written acknowledgement and a promise to pay the debt unconditionally. For example, the court in Yadegar v. Deutsche Bank Natl. Trust Co., 164 A.D.3d 945 held that a mortgagor's letter, which only acknowledged the debt but disclaimed her intent to satisfy it with her own funds, was insufficient to revive an expired foreclosure action. Similarly, in Sichol v. Crocker, 177 A.D.2d 842, the court held that a mortgagor's letter, which acknowledged the debt but only indicated a promise to pay conditioned on an execution of a permanent modification agreement, was also insufficient to reset the statute of limitations.

Absent a written acknowledgement, General Obligations Law §17-107, which applies exclusively to mortgage debts, allows a mortgagee to revive an expired foreclosure action only if the mortgagor made partial payment under circumstances under which courts can infer an absolute and unqualified acknowledgement of the debt and a promise to pay the balance. For example, in U.S. Bank N.A. v. Martin, 144 A.D.3d 891, the court held that since the mortgagor made a payment on the debt to obtain an extension for a bankruptcy stay, the payment did not constitute an unqualified promise to pay the remainder. Thus, the payment did not reset the statute of limitations.

However, the Second and Third Department have disagreed as to whether trial payments under the Home Affordable Mortgage Program constitute a sufficient acknowledgement to revive an expired foreclosure action. Contrary to the Second Department's holding in Nationstar Mortgage, the Third Department in Wells Fargo Bank N.A. v. Grover, 165 A.D.3d 1541 held that two trial payments under the same program, without reaching a permanent modification, were sufficient to revive a time-barred foreclosure action. From those payments, the Third Department inferred a promise to pay the remainder.

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Questions of Fact About Purchasers' Good Faith In Making Mortgage Applications

Chen v. McKenna NYLJ 3/6/20, p. 24, col. 3 AppDiv, Second Dept. (memorandum opinion)

In purchasers' action for return of a down payment, both parties appealed from Supreme Court's denial of their respective summary judgment motions. The Appellate Division affirmed, holding that questions of fact remained about purchasers' good faith in making mortgage applications.

Purchasers entered into a contract to purchase real property for $945,000 and tendered a 10% deposit. The contract required them to promptly and diligently apply to institutional lenders for a mortgage loan in the amount of $470,000. At the time of contract, purchaser provided sellers with a letter from Dollarwise Mortgage indicating that they qualified for a 30-year mortgage in the amount of $600,000, conditioned on satisfactory appraisal value. After sellers granted purchasers two extensions of time to obtain a mortgage commitment, purchasers' lawyer sent seller a letter in which Cathay Bank denied a mortgage application by one of the purchasers for insufficient income. The letter requested a return of the down payment. When seller objected that only one of the purchasers had applied for the mortgage loan, purchaser's lawyer requested additional time. Seller's lawyer then informed the lawyer that seller would grant no further extension, and that purchasers were in default. Purchasers then brought this action for return of the down payment, and both parties moved for summary judgment. Supreme Court denied both motions.

In affirming, the Appellate Division held that purchasers had failed to eliminate questions of fact about whether both of them had made diligent, good faith efforts to secure mortgage financing. Similarly, seller had failed to eliminate questions of fact on that issue.

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Questions of Fact Remain on Implied Easement Claims

Bekkering v. Christiana 2020 WL 930488, 2/27/20 AppDiv, Third Dept. (memorandum opinion)

In an action to establish the existence an easement, all parties appealed from Supreme Court's denial of their respective summary judgment motions. The Appellate Division affirmed, concluding that questions of fact remained both on the easement by prescription claim and on the easement by implication claim.

Alleged servient owners own or lease a parcel of property that includes a 15-foot alley. The allegedly servient parcel is currently operated as a Dunkin' Donuts franchise. In 2015, servient owners obtained approval from the village to add a drive-through window and to make the alley an exit-only passageway. The following year, two owners of land abutting the alley brought this action for a judgment declaring that they have an easement over the alley. They contended both that they had acquired easements by prescription through long-term use, and that they owned easements by implication because their deeds described their parcels as bounded by the alley. Supreme Court denied the parties' respective summary judgment motions.

In affirming, the Appellate Division acknowledged that an easement by implication arises when a grantor executes a deed describing the conveyed land as abounded by a road or way retained by the grantor. But the court noted that in this case, the court noted that the 1892 map relied upon by the abutting owners did not show a clear intent by the original owner to dedicate the 15-foot alley as a street for use by subsequent owners of the abutting lot. The court also noted that because the record did not contain a complete chain of title, the court could not determine whether any easement had been extinguished, even assuming the 1892 conveyance created an implied easement. The court then held that the easement by prescription claim raised questions of fact about whether the abutting owners had been permitted to use the alley out of neighborly accommodation.

Comment

When a common grantor conveys a parcel by a deed that makes reference to a subdivision map, a presumption arises that grantee enjoys an easement by implication over streets abutting the parcel if those street appear on the subdivision map. For instance, in Iovine v. Caldwell, 256 A.D.2d 974, the Third Department held that the fee owner of a road could not obstruct an abutting owner's access to the road when the abutting owner's deed made specific reference to the subdivision map which highlighted the road abutting the parcel. Similarly, in Cashman v. Shutter, 226 A.D.2d 961, the Third Department held that the grantee plaintiff was entitled to an easement by implication where grantee's deed described the property conveyed as being bound by Sagamore Avenue, and referred to a subdivision map showing Sagamore Avenue as a paper street.

However, even if the grantee's deed refers to the subdivision map, the grantee enjoys an easement by implication only over those roads abutting the grantee's parcel and any other roads necessary to reach the next intersecting street, not over all roads displayed on the subdivision map. Thus, in DeRuscio v. Jackson, 164 A.D.2d 684, the Third Department dismissed an easement by implication claim against owners of a roadway depicted on a subdivision map when the roadway did not abut claimant's parcel, while holding that claimant did enjoy an easement by implication over the roadway that did about his parcel.

When the grantee's deed does not refer to a subdivision map showing an abutting road, no easement by implication typically arises. Thus, in Palma v. Mastroaianni, 714 N.Y.S.2d 537, the Third Department held the grantee landowner was not entitled to an easement by implication because grantee did not provide proof that the deed from the original grantor referred to the subdivision or the subdivision map. The court also found no easement by implication from prior sue because the only evidence submitted to show the roadway existed prior to the separation of the parcels was a dotted line on a survey map in 1836.

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Presumption of Hostility Supports Adverse Possession Claim

Waterview Towers, Inc. v. 2610 Cropsey Development Corp. NYLJ 3/13/20, p. 27, col. 5 AppDiv, Second Dept. (memorandum opinion)

In an action to establish title by adverse possession, record owner appealed from judgment, after a nonjury trial, in favor of adverse possessors. The Appellate Division affirmed, holding that record owner had not rebutted the presumption of hostility.

The parties each own land abutting Centre Place, a private driveway/street, although record owner apparently holds record title to the street. Adverse possessor has long maintained a small parking lot along the half of Centre Place abutting its parcel. When current record owner acquired title, it asserted ownership of the parking lot, prompting adverse possessor to bring this action. Supreme Court awarded judgment to adverse possessor, finding that the possessor had satisfied all of the necessary requirements under the pre-2008 adverse possession statute.

In affirming, the Appellate Division started by agreeing that the old statute applied because adverse possessor's claim vested in 2006 at the latest. The court then held that because the possessor had established all of the elements except hostility, a presumption of hostility arose. Finally, the court held that record owner had not rebutted the presumption of hostility, concluding that the "paper street rule" was inapplicable because Centre Place had been opened and in existence as a street for more than 100 years.

Comment

While easements by grant may generally be extinguished by adverse possession, "paper street" easements may not be extinguished "absent a demand by the owner that the easement be opened and a refusal by the party in alleged adverse possession." Berry v. Southard, 15 A.D.3d 516 (2005). "Paper street" easements arise out of instances in which a grantor subdivides a tract of land and conveys an easement in a street by reference to a filed map. These "paper" streets appear on the filed plan, but, in reality, are not "definitively located and developed through use [and so] are not yet in functional existence." Spiegel v. Ferraro, 73 N.Y.2d 622 (1989). Usually, these paper streets are wooded or undeveloped areas, and so easement holders could not be expected to "have notice of the adverse claim until either the easement is opened or the owner demands that it be opened." Id.

The paper street exception does not apply to easements in streets which were opened and used before the adverse possession began. In Spiegel v. Ferraro, the Court of Appeals held that the conveyed easement in question was definitively located through use and functionally in existence, and so the paper street rule was inapplicable. The court found that the plaintiff-easement holders' predecessors had opened the easement by using it as a means of access to a main street. When the defendant-adverse possessors regraded the easement, installed gates around it, and exclusively used it for storing wrecked cars for the length of the prescriptive period, the court upheld their adverse possession claim, holding that the paper street exception was inapplicable.

In Guardino v. Colangelo, the Third Department held that while the paper street rule protects unopened easements against adverse possession claims, it does not protect fee interests against those claims. 262 A.D.2d 777. In Guardino, the common grantor conveyed an easement to the occupier by subdividing land by reference to a filed map, and then conveyed the land on which the easement was located to other owners in fee as tenants in common. When the occupiers met each element of adverse possession, they established not only an easement but title by adverse possession because the "paper street rule" did not protect owners who held fee simple title to land.

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Questions of Fact Remain About County's Liability for Fuel Oil Discharge

Plainview Properties SPE, LLC v. County of Nassau NYLJ 3/13/20, p. 28, col. 3 AppDiv, Second Dept. (memorandum opinion)

In an action by landowner against the county for damages resulting from a discharge of fuel oil under landowner's land, the county appealed from Supreme Court's denial of its summary judgment motion. The Appellate Division affirmed, concluding that questions of fact remained about the county's liability for the discharge.

In 1999, the county sold a complex of buildings to landowner and leased back some of those buildings. The lease prohibited the county from causing injury to the premises, which included fixtures used in connection with the premises, and required the county to maintain the premises. A single network of pipes serves all of the buildings leased by the county, but also served an unused building not leased by the county. In 2009, the county discovered that thieves had stolen copper fuel distribution pipes located the in the basement of the unused building, causing some amount of fuel oil to spill out. Landowner then brought this action against the county for damages, alleging a violation of Navigation Law section 181(1), a breach of the lease, and common law negligence. Supreme Court denied the county's summary judgment motion.

In affirming, the Appellate Division started by noting that the Navigation Law provision entitles a faultless property owner to maintain a claim against a party who actually caused or contributed to the discharge. In this case, landowner had raised question of fact about whether the county could have capped a T-joint in the leased premises to prevent the discharge. In addition, landowner introduced expert testimony to dispute the county's contention that most of the discharge occurred long before the 2009 theft. With respect to the breach of lease provision, the court held that questions of fact existed about whether the pipes the county used were fixtures that, within the meaning of the lease, were the county's obligation to maintain. Similarly, in light of evidence that the county received a complaint about fuel odors after a fuel delivery went missing, the court held that questions of fact remained about whether the county had been negligent.

Comment

A landowner is strictly liable under Navigation Law §181 for claims by injured parties due to a discharge of petroleum on his property, if the landowner could have controlled the activities leading to the discharge or if the landowner knew about the discharge and failed to take remedial action. In State v. Green, 96 N.Y.2d 403, the Court of Appeals held a trailer park owner liable for damages when a kerosene tank maintained by a trailer park lessee fell. Since the landowner had reason to believe that the tenant would use petroleum products and the landowner could control the tenant's activities, the landowner was liable to the state for the cost of cleaning up the spill. In State v. Speonk Fuel Inc., 3 N.Y.3d 720, the court held a landowner strictly liable for a discharge of petroleum caused by the prior landowners and occurring prior to the current landowner's purchase of the property. Since the landowner knew about the spill when he purchased the property and failed to take any remedial action, the landowner was liable to the state for the cleanup costs.

An otherwise innocent landowner who is liable to the state or to another injured third party is not without recourse. Navigation Law §181(5) provides a private right of action to faultless injured parties to recover their damages from the discharger. The Court of Appeals has construed this provision to permit landowners to recover their losses from those parties who are responsible for a discharge, so long as the landowner did not cause or contribute to the discharge. In White v. Long, 85 N.Y.2d 564, the court upheld a landowner's right to bring a claim against a previous owner for reimbursement of cleanup costs due to a spill caused by the previous owner.

While a non-faultless landowner is precluded from recovering all his damages under §181, he may be able to recover a portion of his cleanup costs under §176(8). Section 176(8) permits "every person providing cleanup, removal of discharge of petroleum, or relocation of persons" to seek contribution for costs from any other responsible party. Thus, in Sweet v. Texaco, Inc., 67 A.D.3d 1322, where owners of a contaminated property sought to recover cleanup costs and other damages from prior owners or lessors of the property pursuant to both §181 and §176, the Fourth Department denied summary judgment to the landowners on their §181 claim as there remained a question of fact as to whether the landowners contributed to the discharge, but granted summary judgment to the landowners on their §176(8) claim for contribution, finding that the contributory fault of the defendants entitled the landowners to contribution for their cleanup costs, regardless of the landowners' own fault.

Recovery under §176(8) is more limited than recovery under §181, since the landowner may only recover his actual cleanup costs and recovery is limited to that portion of the costs for which the defendant was responsible. Moreover, since §176(8) limits recovery to those providing cleanup, it is unclear if a landowner who did not actually remove the spill but was later found liable to the state for cleanup costs, may seek contribution from a third party under §176(8).