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Homeowners’ Association Had Power to Direct Property Owners to Remove Chickens

The Fourth Department, over a two-justice dissent, determined the plaintiff homeowners’ association acted properly when it directed defendants to remove two chickens from their property.  The “Declaration of Covenants, Conditions and Restrictions…” gave the board “the absolute power to prohibit a pet from being kept on the Properties…”:

“It is well settled that, [s]o long as the [B]oard [of directors of a homeowners’ association] acts for the purposes of the [homeowners’ association], within the scope of its authority and in good faith, courts will not substitute their judgment for [that of] the [B]oard[ ]’ ” … . The Declaration provides that plaintiff’s Board “shall have the absolute power to prohibit a pet from being kept on the Properties, including inside residences constructed thereon.” Here, plaintiff established that its Board was acting for the purposes of the homeowners’ association and within the scope of its authority when it directed defendants to remove the chickens from the property. In addition, there is no evidence that defendants were ” deliberately single[d] out . . . for harmful treatment’ ” inasmuch as no other residents of the subdivision had chickens or were in violation of the applicable restrictive covenant …, and defendants otherwise ” failed to present evidence of bad faith . . . or other misconduct’ ” … . Preserve Homeowners’ Assn Inc v Zahn, 2014 NY Slip Op 03047, 4th Dept 5-2-14

 

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Allegations of a “Conspiracty to Commit Fraud” Survived a Motion for Summary Judgment/Conspiracy Allegations Must Connect Individual Defendants with an Actionable Underlying Tort

The Second Department determined Supreme Court properly refused to grant summary judgment in favor of an attorney in an action based upon serious allegations of malpractice in connection with a real estate transaction.  Amony other allegations, it was claimed that the attorney allowed an employee to pose as him and caused the plaintiffs to (unknowingly)  sign documents accepting the premises as is. In affirming Supreme Court’s finding that a question of fact had been raised about the “conspiracy to commit fraud” allegations, the Second Department explained the nature of a civil conspiracy:

“New York does not recognize civil conspiracy to commit a tort . . . as an independent cause of action” … . However, “a plaintiff may plead the existence of a conspiracy in order to connect the actions of the individual defendants with an actionable, underlying tort and establish that those actions were part of a common scheme” … . “The allegation of conspiracy carries no greater burden, but also no less, than to assert adequately common action for a common purpose by common agreement or understanding among a group, from which common responsibility derives. Therefore, under New York law, [i]n order to properly plead a cause of action to recover damages for civil conspiracy, the plaintiff must allege a cognizable tort, coupled with an agreement between the conspirators regarding the tort, and an overt action in furtherance of the agreement. A bare conclusory allegation of conspiracy is usually held insufficient”… . Blanco v Polanco, 2014 NY Slip Op 02735, 2nd Dept 4-23-14

 

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County Could Not Avoid or Delay Payment of Property Tax Refund on Financial Hardship Grounds

The Second Department determined the county did not make a sufficient showing of “fiscal chaos” to allow it to avoid immediate payment of a refund the  overpayment of property taxes:

Contrary to the appellants’ contention, the decisions of the Court of Appeals … do not stand for the proposition that a court may decline to issue an award of damages or refunds against a municipality whenever such award will result in financial hardship … . “Instead, these cases stand for the more limited proposition that, where a municipality has reasonably relied upon a widespread and longstanding practice (as in Matter of Hellerstein) or a statute is later invalidated (as in Foss), and where applying the invalidation retroactively would call into question a settled assessment roll or property rights based thereon,’ a court may exercise its discretion by giving its holding only prospective application” … . No such situation is present in the instant case. Accordingly, under the circumstances presented here, the Supreme Court properly rejected the appellants’ “fiscal chaos” defense, and granted the petitioner’s motion to compel the appellants to satisfy obligations that they incurred in connection with the stipulation of settlement and, thus, to calculate and pay the refund owed to it. Matter of Long Is Automotive Group Inc v Board of Assessors of Nassau County, 2014 Slip Op 02586, 2nd Dept 4-16-14

 

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Code Provision Requiring Issuance of Rental Certificate by City Prior to Leasing an Apartment Deemed Constitutional

The Third Department determined the code provision (Rental Certificate Ordinance or RCO) which required the issuance a rental certificate each time a vacant apartment is about to be leased is constitutional.  Entry to the apartment is accomplished either with the consent of the owner, or upon the issuance of a search warrant:

The RCO provided, in relevant part, that “[i]t shall be unlawful for any owner to permit the occupancy of any rental unit subject to [former article X of the Code of the City of Schenectady], unless such unit has a current and valid rental certificate or temporary rental certificate” (Code of City of Schenectady former § 167-59 [A]). Thus, “[w]henever a vacancy shall exist in a rental unit and a leasing is about to occur, or whenever there is a change in occupancy, the owner [must] submit a written application for a rental certificate” (Code of City of Schenectady former § 167-60 [A] [1]) and, “within five working days of receipt of [such] application, the Building Inspector [must] inspect the rental unit to determine if [it] is in compliance with” certain enumerated housing standards (Code of City of Schenectady former § 167-60 [A] [2]). If the Building Inspector is unable to perform the necessary inspection within the five-day window, the property owner may apply for a temporary rental certificate, which “is valid for 30 days or until the unit is inspected . . . , whichever is less” (Code of the City of Schenectady former § 167-60 [B]). In the event that the property owner refuses to grant access to the premises, “the Building Inspector shall apply for a search warrant or court order in an appropriate court and upon a showing that there [are] reasonable grounds to believe that a building or rental unit within [the] building is rented and occupied in violation of” the RCO (Code of the City of Schenectady former § 167-61). A property owner’s violation of the RCO may result in the imposition of a fine or other civil or criminal penalties (see Code of the City of Schenectady former § 167-67).

“It is well established that the 4th Amendment protection against unreasonable searches and seizures extends to administrative inspections of private commercial premises. [Thus,] to the extent that the challenged ordinance directly or in practical effect authorizes or requires a warrantless inspection, it will not pass constitutional muster” … . Here, however, the RCO expressly required either the consent of the property owner or the issuance of a valid search warrant in order for the Building Inspector to conduct the administrative inspection. As the inclusion of the warrant requirement is sufficient to safeguard plaintiff’s constitutional rights, his challenge to the facial validity of the RCO must fail … . Wisoff v City of Schenectady, 2014 NY Slip Op 02479, 3rd Dept 4-10-14

 

Question of Fact About Whether Good Faith Lender, Which Recorded Its Mortgage First, Had a Duty to Inquire About a Prior Mortgage

The Second Department determined there was a question of fact about the priority of a mortgage held by a good-faith lender for value and recorded first:

“Under New York’s Recording Act (Real Property Law § 291) a mortgage loses its priority to a subsequent mortgage where the subsequent mortgagee is a good-faith lender for value, and records its mortgage first without actual or constructive knowledge of the prior mortgage” … . “[A] mortgagee is under a duty to make an inquiry where it is aware of facts that would lead a reasonable, prudent lender to make inquiries of the circumstances of the transaction at issue” … . Here, the moving defendants demonstrated, prima facie, that they have a first lien with respect to Lot 56 by submitting evidence that they were good faith lenders for value protected by Real Property Law § 291 … . However, in opposition, the plaintiff’s submissions … raised a triable issue of fact as to whether the moving defendants had a duty to inquire about whether the mortgage previously entered into …. was intended to encumber the entirety of [the property].   Wells Fargo NA v Savinetti, 2014 NY Slip Op 02428, 2nd Dept 4-9-14

 

A Forged Deed Is Void Ab Initio and Conveys Nothing to a Bona Fide Purchaser or Encumbrancer

The Second Department explained the effect of a forged deed on all subsequent transactions in which the forged deed is involved:

“A deed based on forgery or obtained by false pretenses is void ab initio, and a mortgage based on such a deed is likewise invalid” … . “If a document purportedly conveying a property interest is void, it conveys nothing, and a subsequent bona fide purchaser or bona fide encumbrancer for value receives nothing” … . Jiles v Archer, 2014 NY Slip Op 02262, 2nd Dept 4-2-14

 

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Question of Fact Whether Deed Procured by Fraud and Whether Mortgagee Had Notice of the Potential Fraud

The Second Department determined a question of fact had been raised about whether a property transfer was procured by fraud.  If so, the deed and the related mortgage would be void with respect to the mortgagee/incumbrancer (Wells Fargo).  There was evidence the mortgagee was on notice about the possible fraud and there was evidence of fraud in the factum:

Real Property Law § 266 protects the “title of a purchaser or incumbrancer for a valuable consideration, unless it appears that he [or she] had previous notice of the fraudulent intent of his [or her] immediate grantor, or of the fraud rendering void the title of such grantor.” Thus, a mortgagee is not protected in its title if it had previous notice of potential fraud by the immediate seller, or knowledge of facts which put it on inquiry notice as to the existence of a right in potential conflict with its own … . A mortgagee has a duty to inquire when it is aware of facts that would lead a reasonable, prudent lender to inquire into the circumstances of the transaction at issue … . A mortgagee who fails to make such an inquiry is not a bona fide incumbrancer for value … . Here, Wells Fargo’s submissions contain information regarding the plaintiff’s possession of the property that put it on inquiry notice as to the plaintiff’s potential right to the property … . Thus, Wells Fargo failed to establish its prima facie entitlement to judgment as a matter of law on the issue of whether it lacked notice of a potential fraud … . Real Property Law § 266 also does not protect a bona fide incumbrancer for value where there has been fraud in the factum, as the deed is void and conveys no title … . Such a conveyance conveys nothing, and a subsequent bona fide incumbrancer for value receives nothing … . Here, Wells Fargo failed to establish its prima facie entitlement to judgment as a matter of law on the issue of whether the subject deeds are void ab initio on the ground of fraud in the factum … . Williams v Mentore, 2014 NY Slip Op 01449, 2nd Dept 3-5-14

 

Setback Dimensions Drawn on Subdivision Map Not Reflected in Documents in Defendants’ Chain of Title/Setback Restrictions, Therefore, Did Not Run With the Land

The Second Department reversed Supreme Court, finding that the setback lines drawn on a subdivision map were not reflected on the documents in defendants’ chain of title and, therefore, did not run with the land:

“[T]he policy of the law is to favor free and unobstructed use of realty” … . “[A] purchaser takes with notice from the record only of incumbrances in his direct chain of title. In the absence of actual notice before or at the time of his purchase or of other exceptional circumstances, an owner of land is only bound by restrictions if they appear in some deed of record in the conveyance to himself or his direct predecessors in title” … . “A purchaser is not normally required to search outside the chain of title” … . Deed restrictions are strictly construed against those seeking to enforce them and will be enforced only where their existence has been established by clear and convincing proof … .In this case, the plaintiffs failed make a prima facie showing that the front and rear yard setback lines drawn on the subdivision map are deed restrictions that run with the land. Contrary to the plaintiffs’ contention, there is nothing in the defendants’ chain of title which indicates that these setback lines are deed restrictions that run with the land… . Butler v Mathisson, 2014 NY Slip Op 01289, 2nd Dept 2-26-14

 

Plaintiff’s Alleging a Deed Executed Within the Ten-Year Statute of Limitations for Adverse Possession Is Void Creates a Presumption of Possession by the Plaintiff Within the Ten-Year Period

The Second Department determined that plaintiff’s action to quiet title was not time-barred. Plaintiff alleged decedent’s signature on a deed was forged. By alleging the 1998 deed was void, plaintiff is presumed to have had possession of the premises within the statutory 10-year statute of limitations for adverse possession:

CPLR 212(a) provides that “[a]n action to recover real property or its possession cannot be commenced unless the plaintiff, or his predecessor in interest, was seized or possessed of the premises within ten years before the commencement of the action” (CPLR 212[a]…). However, CPLR 212(a) must be read together with RPAPL 311, which provides that “the person who establishes a legal title to the premises is presumed to have been possessed thereof within the time required by law; and the occupation of the premises by another person is deemed to have been under and in subordination to the legal title unless the premises have been held and possessed adversely to the legal title for ten years before the commencement of the action” (RPAPL 311 [emphasis added]…)..Here, the plaintiff sufficiently alleged possession of the subject premises within 10 years of commencing this action by asserting that the 1998 deed …, as well as each subsequent deed in the chain of title, was void. Under these circumstances, “the plaintiff, as the alleged legal title holder of the premises, is presumed to have possession of the premises within the time required” … . Elam v Altered Ego Realty Holding Corp, 2014 NY Slip Op 01292, 2nd Dept 2-26-14

 

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Public Trust Doctrine Re: Allowing a Restaurant in a Public Park/License and Lease Characteristics Compared

In a full-fledged opinion by Judge Graffeo, the Court of Appeals determined that a the city’s allowing a restaurant to operate in a public park did not violate the public trust doctrine and the arrangement between the city and the restaurant was a valid license, not a lease (which would have required approval by the legislature):

Under the public trust doctrine, dedicated parkland cannot be converted to a non-park purpose for an extended period of time absent the approval of the State Legislature … . * * * … [A]lthough it is for the courts to determine what is and is not a park purpose, … the Commissioner enjoys broad discretion to choose among alternative valid park purposes. Observing that restaurants have long been operated in public parks, we [in 795 Fifth Ave Corp v City of New York, 15 NY2d 221] rejected plaintiffs' public trust claim, holding that they could show only a “difference of opinion” as to the best way to use the park space and that this “mere difference of opinion [was] not a demonstration of illegality”… . * * *

We have stated that parkland cannot be leased, even for a park purpose, absent legislative approval … . * * *

A document is a lease “if it grants not merely a revocable right to be exercised over the grantor's land without possessing any interest therein but the exclusive right to use and occupy that land” … . It is the conveyance of “absolute control and possession of property at an agreed rental which differentiates a lease from other arrangements dealing with property rights” …. . A license, on the other hand, is a revocable privilege given “to one, without interest in the lands of another, to do one or more acts of a temporary nature upon such lands” … . That a writing refers to itself as a license or lease is not determinative; rather, the true nature of the transaction must be gleaned from the rights and obligations set forth therein. Finally, a broad termination clause reserving to the grantor “the right to cancel whenever it decides in good faith to do so” is strongly indicative of a license as opposed to a lease … . Union Square Park Community Coalition Inc v New York City Department of Parks and Recreation, 17, CtApp 2-20-14

 

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