Court Opinion

ID: 5711186
Source: CourtListenerOpinion
Date Created: 2022-01-12 15:54:12.874759+00
Date Added: 2024-06-11T08:40:31.258528
License: Public Domain

Andrias, J. (dissenting).
The building in question, a five-story brownstone on West 86th Street, was conveyed by the City pursuant to article 16 of the General Municipal Law as an accelerated Urban Development Action Area Project (UDAAP). The facts are undisputed and are fairly stated by the majority.
Relying upon the three-prong test formulated by the Court of Appeals in Neponsit Prop. Owners’ Assn. v Emigrant Indus. Sav. Bank (278 NY 248, 254-255 [1938]), the majority finds that because the provision in the deed stating that the building was being conveyed by the City pursuant to article 16 of the General Municipal Law is contained in the precatory, whereas or recital clauses and not in the granting or habendum clauses and did not include any reference to 330 West 86 Oaks Corp.’s “successors and assigns,” the City failed to state such intent clearly in the deed. This is simply incorrect.
The majority finds that 330 West 86 Oaks Corp. obtained the benefit of the accelerated UDAAP provisions and undeniably defaulted in its obligations under the deed. Nevertheless, it accepts the new owner’s argument that restrictive covenants are to be strictly construed against those seeking to enforce them and that the recitals in the deed and resolutions incorporated therein have no legal effect, and it holds that the new owner, which bought the building after the commencement of this suit and subject to a lis pendens, is not responsible for the breaches of its predecessor in interest with respect to the duty to rehabilitate the existing building or to construct a one- to four-unit dwelling without a change in land use as required by the City Council resolution accelerating the process and the Mayor’s approval of the sale. However, regardless of whether the covenants restricting the use of the land are deemed to run with the *121land or not, the habendum clause, upon which the majority places such emphasis, specifically provides that the agreements and covenants set forth in the deed “shall inure to the benefit of the City and shall bind and be enforceable against Sponsor and its successors and assigns.”
The majority nevertheless finds that because 330 West 86 Oaks Corp. was required by the express terms of the deed to allow the existing tenants to remain in the building for two years without a rent increase and by General Municipal Law § 695 (5) to rehabilitate the building “within a definite and reasonable period of time,” such requirements are dissimilar to the covenants in Neponsit and City of New York v Delafield 246 Corp. (236 AD2d 11 [1997]), which had no durational requirements. However, the majority’s reliance on such time limits to conclude that the covenants do not run with the land is misplaced inasmuch as the imposition of reasonable deadlines for completion of the project is “merely a reflection of prudent business practices” (Delafield 246 Corp., supra at 25). It also concludes that, by requiring a time frame for the completion of the rehabilitation project, the perpetual encumbrance sought is inconsistent with the purpose of the statute.
However, there is simply no basis for such a restrictive reading of the statute. In fact, General Municipal Law § 691, which sets forth the policy and purposes of the Urban Development Action Area Act, gives no indication that it is intended for the short-term effect the majority would accord it. It declares, among other things, that it must be the public policy of the State’s municipalities “to assure that each segment of our society, particularly enterprises experienced in the construction of one to four family residential structures . . ., is accorded a real and proper ability to participate in projects to be undertaken pursuant to this article.” The majority’s holding, which would permit the demolition of the existing five-story brownstone and the construction of a high rise “needle” apartment building in its place, rather than effectuating the legislative intent for the program, perpetuates a fraud against the public fisc.
The City, as a municipal corporation, is not free, as is a private property owner, to sell or convey municipally owned property under any terms and conditions it chooses. The power to sell such property is derived solely from the General Municipal Law. In this case, the City is empowered to dispose of city-owned real property, without public auction or sealed bids, solely for the purpose of providing incentives and encouraging participation *122of private enterprise in the rehabilitation of substandard residential buildings. In this case 330 West 86 Oaks Corp. was formed by the building’s tenants under the guidance of the City for that express purpose.
Moreover, even if the deed’s recitals may not constitute a restrictive covenant in and of themselves, they are very important in determining the intention of the parties, which is to be determined “so far as such intent can be gathered from the whole instrument” (Real Property Law § 240 [3]). Even where the intentions of the parties, which are paramount, notwithstanding the rule requiring the strict construction of restrictive covenants, are not clear from the instrument itself, they may be gleaned from all the surrounding circumstances (see Jennings Beach Assn. v Kaiser, 145 AD2d 607, 608 [1988]). Generally a recital clause which merely evinces a goal is not binding; however, in this case the recital clauses in the deed and the implementing documents attached thereto and made a part thereof are the legal basis for the conveyance and the use of the subject building that is mandated by such conveyance. To construe the deed and the attached documents otherwise not only exalts form over substance, but ignores the statutory underpinnings for such approvals and renders the basis of the entire conveyance meaningless and invalid.
This is not an instance where a private homeowner conveys a piece of adjoining land with the intention of restricting its use to the construction of a one-family home, but fails to include such restriction in the deed. Here, the only authority for the conveyance is part and parcel of the statutory purpose of the conveyance and without such purpose, the deed is unlawful and cannot be enforced.
The motion court properly held that
“where as here, a deed ‘derives all its validity’ from a special statutory provision, that provision ‘will be construed into and with the deed’ Matter of Lade v Abbott, 185 Misc 501, 507 (Sup Ct, Onondaga County 1945), quoting 26 CJS, Deeds § 81. See also United States v The City of New York, 233 F2d 307 (2d Cir 1956).”
As found by the court, the deed specifically provides that it is subject to the provisions of all local and state laws and regulations, including General Municipal Law § 695 (5), which requires that the deed “contain provisions insuring the use of *123such real property for purposes consistent with such urban development action area project,” in this case the rehabilitation and renovation of the existing building or the construction of a one- to four-unit dwelling without a change in land use.
Accordingly, the motion court properly declared that the covenants in the deed run with the land and the orders appealed from should be affirmed in all respects.
Sullivan and Williams, JJ., concur with Mazzarelli, J.E; Andrias and Malone, JJ., dissent in a separate opinion by Andrias, J.
Amended order and judgment (one paper), Supreme Court, New York County, entered March 23, 2005, reversed, on the law, without costs, defendant 330 West 86th Street, LLC’s motion for summary judgment granted, plaintiff 328 Owners Corp.’s motion for summary judgment and the City’s motion on its cross claims denied, and it is declared that the property may be used for purposes other than the rehabilitation or conservation of the existing building thereon, or the construction of one- to four-unit dwelling without any change in land use. Appeal from order and judgment (one paper), same court, entered November 5, 2003, dismissed, without costs, as superseded by the appeal from the amended order and judgment.