Removing Restrictive Covenants In New York

Although the statute, by its terms, is applicable only when the restriction is of no actual and substantial benefit to the persons seeking enforcement, courts generally remove covenants that continue to provide some benefit if enforcement would, contrary to the parties' original intent, leave the burdened landowner with no permissible use of the property. The leading case is Orange and Rockland Utilities, Inc. v. Philwold Estates, Inc., 52 NY2d 253, where the restriction limited use of the burdened land to construction of a hydroelectric plant — a use that became impossible when the state condemned the burdened owner's riparian rights in the adjacent river. The benefitted landowner also held an easement to use the burdened land for hunting and fishing purposes, but the Court of Appeals held that even if the easement would be enhanced if the burdened land were kept in unspoiled condition, that benefit was not sufficient to permit continued enforcement of the restrictive covenant. Similarly, in Board of Education v. Doe, 88 A.D.2d 108, the Fourth Department held that a school district was entitled to removal of a covenant precluding commercial use of its property when the school district had no further use of the school established that the cost to build residential homes on the lots would be greater than the price buyers would pay for those homes. Even though maintenance of the covenant was "not totally valueless" to neighboring residential owners, the court emphasized the absence of a market for the school parcel if limited to residential use. The court also noted that most of the benefited landowners had voluntarily released their rights, leaving only three of 140 landowners remaining as parties to the action. See also, Zimmerman v. Seven Corners Development, Inc., 237 A.D.2d 892 (removing single-family use covenant where the town had enacted a zoning ordinance prohibiting residential development on the burdened land).

By contrast, when the burdened landowner can make productive use of the burdened land, courts have generally been unwilling to remove the restrictions, even if those restrictions substantially reduce the value of the burdened land. For instance, in Chambers v. Old Stone Hill Road Associates, 1 NY3d 424, the Court of Appeals declined to remove a covenant limiting use to single-family homes when a wireless communications company sought to erect a cellphone antenna on the property. The court concluded that any hardship to the communications company and its lessor was self-created because they had started to construct the facility with knowledge of the restrictive covenants. And in Deak v. Heathcote Assn, 191 AD2d 671, the Second Department declined to remove a covenant prohibiting subdivision of existing lots within a particular neighborhood, noting that enforcement of the restriction "will only deprive the plaintiffs of an unanticipated profit from the subdivision of their property." See also, Cody v. Anthony Fabiano and Sons, Inc., 246 A.D.2d 726 (declining to remove residential use covenant at the behest of a mining company that had never established any effort to sell the burdened land for residential purposes).