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Presumption Tenants-In-Common Share Equally Can Be Rebutted

The First Department noted that the presumption that tenants-in-common share equally in the common tenancy, that presumption can be rebutted:

“While there is a presumption that tenants-in-common share equally in their common tenancy, such a presumption may be rebutted if the facts show that they hold the tenancy in unequal shares. A court acting in equity may take into account the amounts invested in the property by the respective tenants in determining the shares to which they are entitled” … . Here, the court properly considered defendant’s undisputed testimony that she alone contributed all of the funds utilized to purchase and maintain the property, and that she resided in the home since its purchase.  Ampratwum v Appiah, 2015 NY Slip Op 01533, 1st Dept 2-19-15

 

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Lease Provision Allowing the Landlord to Recover Attorney’s Fees in an Action Against the Tenant Triggered the Tenant’s Reciprocal Right to Recover Attorney’s Fees Against the Landlord Pursuant to Real Property Law 234 Should Tenant Prevail in the Action

The Court of Appeals, in a full-fledged opinion by Judge Rivera,  determined that a provision in a lease which allowed the landlord to recover attorney’s fees in a successful action against the tenant for failure to cure a default triggered the tenant’s right to attorney’s fees under Real Property Law 234 should the tenant prevail in the action:

Under Real Property Law § 234,

“Whenever a lease of residential property shall provide that in any action or summary proceeding the landlord may recover attorneys’ fees and/or expenses incurred as the result of the failure of the tenant to perform any covenant or agreement contained in such lease, or that amounts paid by the landlord therefor shall be paid by the tenant as additional rent, there shall be implied in such lease a covenant by the landlord to pay to the tenant the reasonable attorneys’ fees and/or expenses incurred by the tenant as a result of the failure of the landlord to perform any covenant or agreement on its part to be performed under the lease or in the successful defense of any action or summary proceeding commenced by the landlord against the tenant arising out of the lease.”

In order for the tenant to be eligible for attorneys’ fees under this section, the parties’ lease must permit the landlord, in any action or summary proceeding, to recover attorneys’ fees as a result of the tenant’s breach. Where a lease so provides, the court must interpret the lease to similarly permit the tenant to seek fees incurred as a result of the landlord’s breach or the tenant’s successful defense of a proceeding by the landlord. Here, we hold that paragraph 15 provides the basis for the tenant’s claim for reciprocal rights to attorneys’ fees within the meaning of Real Property Law § 234.

Paragraph 15 of the lease, titled “Tenant’s default”, sets forth the landlord’s remedies and the tenant’s liabilities upon the tenant’s failure to comply with a term or rule in the lease. According to this paragraph, where a properly notified tenant fails to cure a default the landlord may cancel the lease and retake possession of the premises, if necessary, by way of an eviction proceeding or other lawsuit. Upon cancellation of the lease and the landlord’s repossession of the premises the tenant is liable for rent for the unexpired term. The landlord’s rights to attorneys’ fees are set forth in clause D. (3) of this paragraph, which states, in part,

“D. If this Lease is cancelled, or Landlord takes back the Apartment, the following takes place:. . . .

“(3) Any rent received by Landlord for the re-renting shall be used first to pay Landlord’s expenses and second to pay any amounts Tenant owes under this Lease. Landlord’s expenses include the costs of getting possession and re-renting the Apartment, including, but not only reasonable legal fees, brokers fees, cleaning and repairing costs, decorating costs and advertising costs.”

Thus, clause D. (3) anticipates that after a tenant’s default leads to the reletting of the premises, the landlord is entitled to collect attorneys’ fees incurred in gaining possession. Under these circumstances, clause D. (3) complies with the requirements of Real Property Law § 234 that the lease provide “in any action or summary proceeding” for the landlord’s recovery of attorneys’ fees “incurred as the result of the failure of the tenant to perform any covenant or agreement contained in such lease.” Graham Ct Owner’s Corp v Taylor, 2015 NY Slip Op 01482, CtApp 2-19-15

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Elements of a Constructive Trust Not Adequately Pled

The Second Department determined plaintiff’s complaint did not state a cause of action for a constructive trust.  Plaintiff alleged she was 50% owner of rental property ostensibly owned by the defendant, her uncle, based upon her uncle’s sharing the rent with plaintiff’s father (now deceased).  The Second Department noted that there was no allegation of a promise running from the uncle to the plaintiff, an essential element of a constructive trust.  The court further noted that plaintiff’s claim she inherited her father’s 50% interest in the property must be adjudicated as part of her father’s estate proceedings:

In general, a constructive trust may be appropriate in situations ” [w]hen property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest'” … . The necessary elements for imposition of a constructive trust are (1) a confidential or fiduciary relationship, (2) a promise, (3) a transfer in reliance on that promise, and (4) unjust enrichment … .

Here, contrary to the Supreme Court’s determination, the plaintiff’s complaint, as amplified by her affidavit, does not adequately plead a cause of action to impose a constructive trust on the … property. While a confidential relationship exists between the plaintiff and the defendant as uncle and niece, the complaint does not allege the existence of a promise between the plaintiff and the defendant, or a transfer in reliance upon a promise between them.

Further, … the plaintiff’s allegations in support of a theory that she should be deemed a 50% owner of the … property do not adequately plead the elements of a constructive trust. Her claim of entitlement is based on the laws of inheritance, and must be pursued by the executor or administrator of her father’s estate … . Igneri v Igneri, 2015 NY Slip Op 01419, 2nd Dept 2-18-15

 

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Annexation of Petitioners’ Land (Located in the Town) by the City Deemed in the Overall Public Interest

The Third Department determined the city’s annexation of petitioners’ land, located in the adjoining town, was in the overall public interest:

A municipality seeking annexation pursuant to General Municipal Law article 17 “has the burden of proving that annexation is in the overall public interest” (…see NY Const, art IX, § 1 [d]; General Municipal Law § 712 [10]). Factors to be considered include “the benefit or detriment to the annexing municipality, the territory proposed to be annexed, and the remaining governmental unit from which the territory would be taken” … . “‘Benefit and detriment are customarily defined in terms of municipal services such as police and fire protection, health regulations, sewer and water service, public utilities and public education'” … . “Another factor entering into the balance is whether the annexing municipality and the territory proposed to be annexed have the requisite unity of purpose and facilities to constitute a community” … .

Here, petitioners established that the lack of municipal water and sewer services in the Town are a major impediment to the development of the property. Mauro testified that he has marketed the property for three years, but potential developers are not interested in it because it lacks access to these services. The services would, however, be available if the property were to be annexed to the City. * * *

The City also established that it provides professional fire and police protection that is better trained and more readily available than the emergency protection services available in the Town. The City bears the expense of full-time, fully-equipped police and fire departments covering a smaller geographic area, while the Town relies on the County Sheriff and volunteer fire departments. As a result, the City’s fire insurance rating is considerably better than that of the Town. Further, any development that occurs in the City will generate more tax revenue to defray the burden on the City’s taxpayers of the expense of maintaining professional police and fire departments, based on the City’s higher tax rate of $21.41 per thousand. For its part, the Town will lose only the minimal annual tax revenue of $51.06, based upon its 2013 tax rate of $1.36 per thousand. Although the Town argues against annexation based on the potential loss of taxes should the parcel be developed, “ordinarily expected adverse tax consequence[s] . . . [are] generally insufficient to defeat an annexation which is otherwise in the over-all public interest”… . Matter of City of Gloversville v Town of Johnston, 2015 NY Slip Op 00575, 3rd Dept 1-22-15

 

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Criteria for Interpreting Ambiguous Property Descriptions in Old Deeds Explained and Applied

The Third Department explained the analytical criteria for determining the location of boundary lines using old deeds which exhibit some ambiguity (thus allowing reference to extrinsic evidence).  The court explained that a hand-written, signed deed was preferred over a subsequent, unsigned type-written description of the property, and that the amount of acreage is the least reliable type of property description:

We agree with Supreme Court that as between the handwritten and typed versions of the April 1885 deed, the handwritten deed is the best evidence of the grantors’ intent, as it is the signed original instrument by which the disputed property was conveyed, while the typed version is an unsigned copy created decades later by an unknown transcriber (see Jerome Prince, Richardson on Evidence §§ 10-101, 10-102 [Farrell 11th ed 1995]). We further agree with the court that the disputed mark following the phrase “more or less” in the handwritten deed appears to be a comma; although it is oddly located on the line below the phrase “more or less” and outside the document’s left margin, it has the same shape as other commas in the deed, including a mark just before the phrase “more or less,” which the parties agree is a comma and which is represented by a comma in the typed version. Nevertheless, the questionable nature of the disputed mark creates an ambiguity that may be clarified by considering extrinsic evidence of the grantors’ intent … . * * *

Where … discrepancies exist in property descriptions, “the rules of construction require that resort be had first to natural objects, second to artificial objects, third to adjacent boundaries, fourth to courses and distances and last to quantity” … . According to these rules, a public highway or other artificial monument takes precedence over the amount of acreage specified in a deed, as “quantity is the least reliable of all descriptive particulars” … . Shattuck v Laing, 2015 NY Slip Op 00413, 3rd Dept 1-15-15

 

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Remainderman Was Entitled to the Tax and Insurance Payments Made on Behalf of the Holder of the Life Estate/Life Estate Should Have Been Extinguished as a Matter of Equity

Plaintiff is the remainderman of defendant’s life estate in real property.  Defendant refused to pay the real estate taxes and insurance for the property.  Plaintiff paid the taxes and insurance and sued for those payments and to have the life estate extinguished. The Second Department determined Supreme Court should have granted summary judgment to the plaintiff:

 

“The essential inquiry in any action for unjust enrichment or restitution is whether it is against equity and good conscience to permit the defendant to retain what is sought to be recovered” … . A plaintiff must show that (1) the other party was enriched, (2) at the plaintiff’s expense, and (3) that it is against equity and good conscience to permit the other party to retain what is sought to be recovered … .

The plaintiffs established their prima facie entitlement to judgment as a matter of law on their first cause of action, which alleged unjust enrichment and sought restitution, and their second cause of action, which alleged waste and sought to extinguish the defendant’s life estate. As life tenant, the defendant was obligated to pay the property taxes and hazard insurance on the subject property, and the intentional failure to do so constitutes waste … . It is undisputed that the defendant intentionally failed to pay the property taxes and hazard insurance on the subject property, and he has clearly expressed his intention not to do so in the future. Under these circumstances, the remainder interest in the subject property is in constant danger of forfeiture in a tax lien sale, unless the plaintiffs continue paying the property taxes and hazard insurance premiums the defendant is otherwise obligated to pay. The plaintiffs therefore demonstrated, prima facie, that the defendant was unjustly enriched by the plaintiffs’ payment of these expenses for the defendant, and that equity warrants extinguishing his life estate in the subject property. In opposition, the defendant failed to raise a triable issue of fact … . Main Omni Realty Corp v Matus, 2015 NY Slip OP 00341, 2nd Dept 1-14-15

 

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The Second of Two Ceremonial Marriages Is Presumed Valid/Property Owned by Persons Not Legally Married, But Who Are Described as Married in the Deed, Own the Property as Tenants In Common with Right of Survivorship Pursuant to the Estates, Powers and Trusts Law (EPTL)

The Second Department determined plaintiff’s complaint was properly dismissed.  Decedent was plaintiff’s mother by her mother’s first marriage (in Haiti).  Plaintiff alleged that her mother’s subsequent marriage to defendant (in the US) was void because her mother never divorced plaintiff’s father. On that basis, plaintiff alleged that her mother and defendant owned real property as tenants in common, not tenants by the entirety, and therefore half of the property passed to her upon her mother’s death.  The Second Department held that the second marriage was presumed valid and plaintiff did not rebut the presumption.  The court further noted that, even if decedent and defendant were not legally married, the property would have been owned as a joint tenants with right of survivorship, by virtue of Estates Powers and Trusts Law (EPTL) 6-2.2(d):

Where as here, there are two ceremonial marriages at issue, the second marriage is presumed valid, requiring proof from the challenger that the first marriage was not terminated … .

The existence of a rebuttable presumption in favor of the defendant established his entitlement to judgment as a matter of law … . In opposition, the plaintiff failed to raise a triable issue of fact.

Further, even if [plaintiff’s mother] were not legally married to the defendant, the deed to the subject property nevertheless created a joint tenancy, with the right of survivorship … . The deed to the subject property was executed in 1980. Accordingly, EPTL 6-2.2(d), as amended in 1975, governs … . Pursuant to EPTL 6-2.2(d) “[a] disposition of real property . . . to persons who are not legally married to one another but who are described in the disposition as husband and wife creates in them a joint tenancy, unless expressly declared to be a tenancy in common.” Joseph v Dieudonne, 2015 NY Slip OP 00338, 2nd Dept 1-14-15

 

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Deed Was Not a “Deed in Lieu of Foreclosure;” Deed Therefore Did Not Transfer Title; Mortgagor’s Interest Can Be Extinguished Only by Foreclosure

The First Department determined a deed constituted a mortgage pursuant to Real Property Law 320, and was not a “deed in lieu of foreclosure.”  Therefore the deed recorded by the defendants did not transfer ownership to them and defendants must foreclose on the mortgage to extinguish the mortgagor’s interest:

Real Property Law § 320 codifies the well-settled common law principle “that the giving of a deed to secure a debt, in whatever form and however structured, creates nothing more than a mortgage” … . The statute does not require a conclusive showing that the transfer was intended as security; rather, it is sufficient that the conveyance appears to be intended only as “a security in the nature of a mortgage” … .

Therefore, as the motion court properly found, “The holder of a deed given as security must proceed in the same manner as any other mortgagee — by foreclosure and sale — to extinguish the mortgagor’s interest” … . This conclusion holds true because the mortgagor has the right of redemption, and that right cannot be waived or abandoned by any stipulation of the parties, even if the waiver is embodied in the mortgage … . Patmos Fifth Real Estate Inc v Mazl Bldg LLC, 2015 NY Slip OP 00278, 1st Dept 1-8-15

 

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Restrictive Covenants in Homeowners’ Association’s Declaration Do Not Apply to Land Along a Road Which Had Been Dedicated by the Association to the Town

The Third Department determined a homeowners’ association (HPHA) could not restrict the placement of a political sign on property along a road which had been dedicated to the town.  Because there was no evidence the HPHA reserved the right to regulate signs on the strip of land transferred to the town, the HPHA had no authority to prohibit the placement of a sign on the land:

Respondents contend that, although Hudson Pointe, Inc. dedicated land to the Town for the purpose of maintaining the roads within the development, such dedication was subject to the restrictive covenants contained in HPHA’s Declaration. Thus, according to respondents, although petitioners’ political signs were located on Town property, HPHA maintained the authority to enforce its sign restriction on this public land. Generally, the process of dedication is “of the nature of a gift by a private owner to the public” …, and dedication requires, among other things, “absolute relinquishment to public use by the owner” …. Thus, a town may acquire a road in fee through dedication “when there has been a complete surrender to public use of the land by the owners, acceptance by the town, and some formal act [by public authorities] adopting the highway . . . coupled with a showing that the road was kept in repair or taken in charge by public authorities” (…see Highway Law § 171///).

While the record is devoid of evidence of the Town’s acceptance of ownership of the roads within the development, the parties do not dispute that the land in question is owned by the Town through dedication. The 1997 deed conveying certain property within the development from Hudson Pointe, Inc. to the Town, contained in the record, does not explicitly reserve to HPHA or Hudson Pointe, Inc. any interest in the conveyed property. In the absence of such reservation, respondents lack the authority to enforce HPHA’s sign restriction on Town land as a matter of law … . Matter of Jasinski v Hudson Pointe Homeowners Assn Inc, 2015 NY Slip OP 00274, 3rd Dept 1-8-15

 

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Tenant Entitled to Attorney’s Fees After Successfully Defending Landlord’s Holdover Action—Discretion to Deny Attorney’s Fees Should Be Used Sparingly Because of the Purpose of the Controlling Statute

The First Department reversed the Appellate Term finding that a tenant who successfully defended a holdover action brought by the landlord was entitled to attorney’s fees. After several lease renewals at a “preferential” rate, the landlord required that a renewal be at the “legal” rate (several thousand dollars higher than the preferential rate) and started a holdover proceeding when the tenant refused to pay the “legal” rate.  Appellate Term decided the tenant was not entitled to attorney’s fees because the landlord had a “colorable claim” that it was entitled to charge the “legal” rate.  The First Department explained that whether the landlord had a “colorable claim” was not the correct standard to apply:

Under Real Property Law § 234, when a residential lease provides for a landlord’s recovery of attorneys’ fees resulting from a tenant’s failure to perform a lease covenant, a reciprocal covenant is implied requiring the landlord to pay the tenant’s attorneys’ fees incurred as a result of, inter alia, the tenant’s successful defense of an action or summary proceeding commenced by the landlord arising out of the lease … . To support an award of attorneys’ fees, the tenant must be the prevailing party, that is, the result must be substantially favorable to the tenant … .

Here, the terms of the parties’ lease plainly triggers the reciprocal covenant mandated by Real Property Law § 234, and the tenant is entitled to recover the attorneys’ fees incurred in his successful defense of the holdover proceeding. Contrary to the landlord’s assertion, the tenant was the prevailing party regardless of whether the holdover proceeding was formally dismissed, since a tenant is entitled to recover fees “when the ultimate outcome is in his favor, whether or not such outcome is on the merits” … .

Despite the tenant’s status as the prevailing party, the Appellate Term nevertheless denied the fee request because, in its view, the landlord’s possessory claim was “of colorable merit” … . This was an improper standard. “The overriding purpose of [Real Property Law § 234] is to provide a level playing field between landlords and tenants, creating a mutual obligation that provides an incentive to resolve disputes quickly and without undue expense” … . Because it is a remedial statute, Real Property Law § 234 “should be accorded its broadest protective meaning consistent with legislative intent” … . The Appellate Term’s conclusion that a tenant’s claim to reciprocal attorneys’ fees can be denied whenever a landlord asserts a colorable claim undermines the salutary purpose of Real Property Law § 234. A “colorable claim” standard would result in the gutting of the protections afforded by the statute because it would allow courts to deny fees whenever the landlord can make a nonfrivolous legal argument in support of its position.

Although courts have some discretion to deny attorneys’ fees sought under Real Property Law § 234, such discretion should be exercised sparingly … . Thus, a request for attorneys’ fees should be denied only where a fee award would be manifestly unfair or where the successful party engaged in bad faith … .

Here, the landlord has made no showing of any bad faith on the tenant’s part. Matter of 251 CPW Hous LLC v Pastreich, 2015 NY Slip Op 00208, 1st Dept 1-6-15

 

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