Bayswater Health Related Facility v. New York City Dept. of Buildings, 38 N.Y.2d 416 (1975)

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A municipality may be equitably estopped from revoking a building permit when a property owner has relied in good faith on the permit, making substantial expenditures or incurring significant obligations, especially when the municipality knew of a curable irregularity and the owner acted truthfully.

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Summary

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Bayswater and Lee each obtained building permits from New York City to convert properties into domiciliary care facilities. After substantial work and expenditures, the city suspended the permits based on an invalid “stop-gap” resolution. Although State certification was technically required, the city had a practice of issuing permits before such certification. The Court of Appeals held that the city was equitably estopped from revoking the permits, as Bayswater and Lee had relied on the permits in good faith, incurring significant expenses. The court emphasized that the State certification was for the *use* of the facility, not its construction, and the city knew that certifications by the appropriate State agency had not yet been secured when it issued the permits.

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Facts

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Bayswater and Lee owned real property in New York City. Both sought to convert their properties into domiciliary care facilities for adults, requiring alterations under the New York State Hospital Code.r
They each applied for and received building permits from the city for the necessary alterations.r
After receiving the permits, both Bayswater and Lee commenced work and incurred substantial expenses and obligations related to the construction.r
The city’s Department of Buildings then suspended the permits, citing a