Court Opinion

ID: 9723370
Source: CourtListenerOpinion
Date Created: 2023-08-26 10:12:47.326014+00
Date Added: 2024-06-11T18:24:47.717517
License: Public Domain

Pigott, J.
(dissenting). I respectfully dissent because the majority’s interpretation of the Urban Development Action Area Act (UDAAA) places indefinite use restrictions on property sold pursuant to that Act when no such restrictions were intended. In my view, the Appellate Division’s order dismissing 328 Owners Corp.’s action and the City’s cross claims against the subsequent purchaser should be affirmed.
The City and 328 Owners Corp. argue that because the deed and its accompanying documents were prepared as part of the accelerated Urban Development Action Area Project (UDAAP), 330 West Oaks Corp. (Oak Corp.), the tenant group that purchased the property, and the City intended that the property would be used for certain, specific purposes in perpetuity. While those documents may, indeed, evidence an intent that Oaks Corp. be bound by certain use restrictions, they show no evidence of an intent that a subsequent purchaser, like 330 West 86th St., LLC (330 West), be so bound.
This is clear from the language of the deed itself. As the majority notes, the deed “must be construed according to the intent of the parties, so far as such intent can be gathered from the whole instrument, and is consistent with the rules of law” (Real Property Law § 240 [3]). In my view, the language of the deed is unambiguous and evidences the parties’ intent that Oaks Corp., and only Oaks Corp., be subject to the use restrictions. Specifically, the deed’s “Recital” clauses state that the property is conveyed pursuant to General Municipal Law article 16 and, in *386particular, that the project “undertaken by [Oaks Corp., as sponsor] . . . consists solely of the rehabilitation or conservation of existing private or multiple dwellings or the construction of one to four unit dwellings.” The recitals describe the authority under which the City acted when it deeded the property to Oaks Corp. and the City’s understanding that Oaks Corp. would use the property for those purposes. These recitals, however, do not constitute covenants or agreements binding on any subsequent purchaser. Nowhere is it mentioned in the deed, either in these recitals or the body thereof, that any subsequent purchaser is limited in its use of the property. Thus, contrary to the majority’s conclusion, it is of no moment that 330 West may have had “notice” of the restrictions meant to be imposed only on Oaks Corp. at the time it purchased the property.
Indeed, the only covenant in the deed that applies to a subsequent purchaser, like 330 West, is that which prohibits “successors and assigns, and every successor in interest” from engaging in discriminatory conduct relative to the use, sale or leasing of the property. It is, of course, axiomatic that purchasers of real property are subject to all applicable zoning ordinances and land use restrictions that a municipality in its lawmaking authority may choose to impose on property located within its boundaries. But limitations found within a deed are a different matter. In such cases, the municipality is acting as a vendor; and, like all vendors, it must strictly adhere to the Real Property Law when it comes to the alienation of real property.
Even assuming that the deed could somehow be read as containing covenants and agreements requiring 330 West to abide by the use restrictions agreed to by Oaks Corp., we have held that express recitals of affirmative covenants that “run with the land” are “generally not binding upon subsequent grantees of the promisor unless [the] well-defined and long-established legal requisites” contained in our holding in Neponsit Prop. Owners’ Assn. v Emigrant Indus. Sav. Bank (278 NY 248 [1938]) have been met (Eagle Enters. v Gross, 39 NY2d 505, 507 [1976], citing Nicholson v 300 Broadway Realty Corp., 7 NY2d 240, 244 [1959]). Neponsit requires that, in order for a covenant to run with the land, the original grantor and grantee must so intend (see Neponsit, 278 NY at 255). In addition, there must be privity of estate between the party seeking to enforce the covenant and the party against whom the covenant is sought to be enforced, and the covenant must “touch and concern” the land upon which it runs (id. at 254-255). Here, the first prereq*387uisite of Neponsit has not been met because, strictly construing the “covenants” against the City and 328 Owners Corp. as we must (see Buffalo Academy of Sacred Heart v Boehm Bros., 267 NY 242, 249 [1935]), it is readily apparent that neither Oaks Corp. nor the City intended any entity other than Oaks Corp. to be bound by the use restrictions. The parties, and the City in particular as drafter of the deed, could easily have crafted a deed binding successors of Oaks Corp. to the use restrictions; but that was not done here.
General Municipal Law § 695 (5) further supports the finding that the use restrictions now sought to be imposed apply only to the original purchaser. That statute provides that any deed disposing of real property pursuant to section 695
“shall contain provisions requiring the purchaser, lessee or grantee to . . . rehabilitate . . . conserve . . . , reconstruct or redevelop such property in accordance with the [UDAAP,] as approved by the [City Council,] within a definite and reasonable period of time subject to the terms of the . . . deed relating thereto between the municipality and the sponsor, and shall contain provisions insuring the use of such real property for purposes consistent with such [UDAAP].”
Thus, even if section 695 (5) is “construed” into the deed, it does not prohibit a subsequent purchaser from redeveloping the property. There is no language in the statute that mandates property initially sold pursuant to the accelerated UDAAP procedure remain, as is argued here, a one to four unit dwelling in perpetuity, or that once a purchaser rehabilitates or conserves the premises it cannot convert the premises to a different use. To the contrary, the City may sell a property pursuant to the accelerated UDAAP procedure when such sale “requires the effectuation of an urban development action area project with[in] a definite and reasonable period of time” (General Municipal Law § 695 [2] [b]). Thus, while a purchaser must effectuate a project within a reasonable time, there is no requirement that once the project is completed the property is forever restricted from becoming something else.
The purpose of article 16 is the swift and quick rehabilitation or conservation of property, and it should not be construed to prohibit future development. If the position of the City and 328 Owners Corp. is taken to its logical conclusion, any property that has been sold by the City pursuant to the accelerated *388UDAAP procedure may now be subject to attack because the property has been changed from its initial use, regardless of how many years have passed, how many times it has been sold, and how pristine its present condition. That is not the result the Legislature intended when it enacted article 16, the purpose of which is to “provide incentives for the correction of . . . substandard, insanitary, blighted, deteriorated or deteriorating conditions ... by the clearance, replanning, reconstruction, redevelopment, rehabilitation, restoration or conservation of such areas” (General Municipal Law § 691).
Notably, the only conditions found in the deed — that the building code violations be cured and that two-year leases be offered to current tenants at a fixed rate — are temporal and directed explicitly at Oaks Corp. The program under which the property was conveyed mandates these conditions and the City, had it chosen to do so, could have taken appropriate action against Oaks Corp. to enforce them. The same can be said about Oaks Corp.’s purported failure to comply with the use restrictions. The City did not avail itself of the enforcement mechanisms specified in the deed, i.e. suing for rescission of the deed or for breach of the promises contained therein. Thus, the purpose behind the accelerated UDAAP process was not subverted by the sale of the property to 330 West, as the majority implies. Rather, it was the City’s draftsmanship of the deed and its failure to enforce the conditions and use restrictions against Oaks Corp. that subverted the UDAAP process.
Chief Judge Kaye and Judges Graffeo, Read, Smith and Jones concur with Judge Ciparick; Judge Pigott dissents and votes to affirm in a separate opinion.
Order reversed, etc.