Lefrak Forest Hills Corp. v. Galvin, 40 N.Y.2d 792 (1976)
A property owner does not acquire a vested right to complete construction based on a building permit when the permit was issued during a grace period after a zoning law change, and the owner fails to meet reasonable conditions attached to permit extensions.
Summary
Lefrak sought an extension of building permits to construct apartment buildings. The Board of Standards and Appeals denied the extension, finding Lefrak had not substantially completed the foundations by the required date. The Appellate Division reversed, holding that prior extensions and reliance on the permits created vested rights. The New York Court of Appeals reversed, holding that Lefrak did not acquire a vested right because the original permit was issued during a grace period after a zoning change, and Lefrak failed to meet the condition of substantial foundation completion for further extensions. The dissent argued the equities favored the community’s right to benefit from the updated zoning resolution.
Facts
In 1960, New York City adopted a zoning resolution prohibiting high-rise apartments in Forest Hills-Kew Gardens, effective December 15, 1961. During the grace period, the Long Island Rail Road sold property to Adson Industries, which filed building plans in 1961 for two 18-story buildings. Permits were issued in July 1963. Adson obtained extensions in 1964, 1965, and 1966. Franklin National Bank, the mortgagee, acquired the property in 1967 after Adson defaulted and secured extensions in 1967, 1968, 1969 and 1970. In 1971, Franklin contracted to sell to Lefrak, who modified the plans to include two 20-story towers and obtained amended permits in August 1971. In December 1971, Lefrak applied for another extension, which the Board denied.
Procedural History
The Board of Standards and Appeals denied Lefrak’s application for a building permit extension. The Appellate Division reversed the Board’s decision, directing that the extension be granted. The New York Court of Appeals reversed the Appellate Division, reinstating the Board’s determination.
Issue(s)
Whether Lefrak acquired a vested right to complete construction of its apartment buildings based on prior building permit extensions, despite failing to substantially complete the foundations by the deadline.
Holding
No, because the original building permit was issued during a grace period following a zoning change, and Lefrak failed to meet the reasonable condition of substantial foundation completion attached to permit extensions.
Court’s Reasoning
The Court reasoned that the traditional vested rights doctrine, which protects property owners who have substantially relied on a validly issued permit before a zoning change, did not apply. The original building permit was not issued before the adoption of the 1960 Zoning Resolution; it was issued during the grace period. As such, Lefrak was subject to reasonable conditions for permit extensions. The key condition was the “substantial construction of foundations.” Because Lefrak failed to meet this condition by the deadline, the Board was justified in denying the extension. The Court distinguished this case from situations where the original permit was issued before the zoning change. In those cases, a property owner could argue that their right to build had already vested. Here, the permit was issued under a specific grace period provision. The Court also noted that prior extensions granted by the Board did not bind the Board to perpetuate past errors, stating that “an administrative agency is not bound to perpetuate past errors. On the contrary, it has the power and the duty to correct an erroneous interpretation of the governing statute or even an unwise policy.” The dissenting opinion argued that the equities favored the community’s right to benefit from the 1960 Zoning Resolution. The dissent also pointed out Lefrak’s modifications to the building plans and the numerous prior extensions granted without substantial progress.