New York Law Review

Tag: subsequent purchaser

  • Gazza v. New York State Dept. of Envtl. Conservation, 89 N.Y.2d 603 (1997): Subsequent Purchasers and Regulatory Takings Claims

    89 N.Y.2d 603 (1997)

    A subsequent purchaser of property may bring a regulatory takings claim, but such a claim will only succeed if the regulation denies the owner economically viable use of the property.

    Summary

    Gazza sought to build a single-family home on his property, but his application was denied due to tidal wetlands regulations. He claimed the denial constituted a taking without just compensation. The New York Court of Appeals held that while a subsequent purchaser can bring a takings claim, Gazza failed to prove the regulation deprived his property of all economic value. The court reasoned that Gazza was aware of the regulations when he purchased the land, but that did not automatically bar his claim. However, because he could not demonstrate that the property retained no economic value, his takings claim failed.

    Facts

    Gazza purchased a parcel of land in 1988. The land was designated as tidal wetlands and subject to regulations under the Tidal Wetlands Act. Gazza applied to the Department of Environmental Conservation (DEC) for permission to build a single-family home on the property. The DEC denied the permit, citing the regulations protecting tidal wetlands. Gazza then filed suit, claiming the denial of the permit constituted a taking of his property without just compensation.

    Procedural History

    Gazza initially sued in Supreme Court, which ruled against him. The Appellate Division affirmed. The New York Court of Appeals granted leave to appeal to consider whether a subsequent purchaser can bring a regulatory takings claim and whether Gazza had established a taking.

    Issue(s)

    1. Whether a subsequent purchaser of property, who takes title with knowledge of pre-existing regulations restricting the use of the property, is automatically barred from bringing a regulatory takings claim.

    2. Whether the denial of a permit to build on the property constituted a regulatory taking requiring just compensation.

    Holding

    1. No, because a subsequent purchaser is not automatically barred from bringing a regulatory takings claim; the timing of the purchase is a factor to be considered.

    2. No, because Gazza failed to demonstrate that the denial of the permit deprived his property of all economically viable use.

    Court’s Reasoning

    The court acknowledged the split of authority on whether a subsequent purchaser can bring a takings claim. The court rejected a per se rule barring such claims, reasoning that it would unduly restrict the alienability of property. The court stated that while knowledge of the regulation is a factor in determining whether a taking occurred, it is not dispositive. The court emphasized the importance of analyzing whether the regulation denies the owner economically viable use of the property. Quoting from prior precedent, the court stated: “a subsequent purchaser may attack previously enacted regulations that affect the purchased property as beyond government’s legitimate police power”. The court found that Gazza failed to meet his burden of proving that the DEC’s denial deprived the property of all economic value. He did not demonstrate that the property was unsuitable for other uses or that it had no remaining market value. Therefore, his takings claim failed. Judge Wesley concurred, agreeing with the result but disagreeing with the majority’s view that a subsequent purchaser’s claim should be treated differently.

  • Anello v. Zoning Bd. of Appeals, 89 N.Y.2d 535 (1997): Subsequent Purchasers and Regulatory Takings Claims

    89 N.Y.2d 535 (1997)

    A subsequent purchaser of property is generally prevented from asserting a regulatory takings claim based on regulations that were in effect at the time of purchase, especially when the property is also subject to restrictive covenants.

    Summary

    This case concerns whether a property owner, Anello, who purchased land already subject to wetlands regulations and restrictive covenants, could claim a regulatory taking. The New York Court of Appeals held that Anello could not claim a taking. The court reasoned that the regulations were in place when she bought the property, and the prior owner had already encumbered the property with covenants that limited its use and value. Therefore, Anello did not have the unrestricted development rights in her “bundle” of property rights when she acquired the land, precluding her takings claim.

    Facts

    A prior owner of the property filed covenants that substantially restricted the use and value of the property, in exchange for the right to subdivide and develop what was then a larger parcel. Later, Anello purchased the property. At the time of purchase, the property was subject to both the existing wetlands regulations and the previously filed restrictive covenants.

    Procedural History

    The Supreme Court determined that the Town did not need to compensate Anello as if she retained the unrestricted right to develop the parcel. The New York Court of Appeals affirmed this decision.

    Issue(s)

    Whether a claimant is prevented from claiming a regulatory taking of her property based on regulations already in place at the time she took title, when the property is also subject to restrictive covenants filed by a former owner substantially restricting its value and use.

    Holding

    No, because the claimant took title subject to covenants filed by the former owner of the property, which substantially restrict the value and use of the property, and because the wetlands regulations were already in effect when the claimant purchased the property.

    Court’s Reasoning

    The court reasoned that the wetlands regulations did not deprive the claimant of any interest in the property that had not already been encumbered by the former owner through the covenants. By purchasing the property with pre-existing restrictions, the claimant never possessed the unrestricted right to develop the parcel. The court essentially adopted the principle that a purchaser cannot claim a taking based on regulations already in place when they bought the property, because the purchase price presumably reflected the restrictions. Wesley, J., concurring, stated that, even if the property should be valued for single-family residences, that valuation is “a consequence of the covenants entered into by the former owner in exchange for the right to subdivide and develop what was then a larger parcel.” The court, in effect, decided that the restrictions already ran with the land, meaning the current owner took title to land that already had those restrictions in place.

  • Todd v. Krolick, 48 N.Y.2d 354 (1979): Enforceability of Unrecorded Agreements Against Subsequent Purchasers

    48 N.Y.2d 354 (1979)

    An agreement creating an interest in real property for longer than three years is void against a subsequent purchaser in good faith unless the agreement is recorded, and mere notice of the existence of facilities on the property does not constitute constructive notice of the underlying agreement.

    Summary

    Todd sued Krolick, seeking to enforce a washing machine agreement between Todd and Krolick’s predecessor in title, Monarch Associates. The New York Court of Appeals held that the agreement, whether a license, lease, easement, or covenant, was unenforceable against Krolick because it was unrecorded. Since it created an interest in real property for longer than three years, Section 291 of the Real Property Law made it void against good-faith purchasers. The court emphasized that mere notice of the washing machines’ presence was insufficient; Krolick needed notice of the agreement itself. Thus, the complaint failed to state a cause of action.

    Facts

    Todd (plaintiff) had an agreement with Monarch Associates, the previous owner of a property. The agreement involved washing machines on the property and purported to bind Monarch and its successors for ten years.
    Krolick (defendant) subsequently purchased the property from Monarch Associates.
    Todd sought to enforce the washing machine agreement against Krolick.
    The agreement was not recorded.
    The plaintiff alleged that the defendants had notice of the washing machines.

    Procedural History

    The Appellate Division held that the agreement was a license, not a lease or easement, and thus not enforceable against the subsequent purchaser.
    The Appellate Division’s order was appealed to the New York Court of Appeals.
    The Court of Appeals affirmed the Appellate Division’s decision.

    Issue(s)

    Whether an unrecorded agreement creating an interest in real property for longer than three years is enforceable against a subsequent purchaser who has notice of facilities on the property but not of the agreement itself.

    Holding

    No, because under sections 290 and 291 of the Real Property Law, such an agreement is void against a subsequent purchaser in good faith for valuable consideration unless the agreement is recorded. Mere notice of the washing machines is insufficient to impute notice of the agreement.

    Court’s Reasoning

    The court based its decision on the application of Sections 290 and 291 of the Real Property Law. These sections protect subsequent purchasers who acquire property in good faith and for valuable consideration. The court reasoned that because the agreement created an interest in real property for a period exceeding three years, it fell under the purview of Section 291, requiring recordation to be effective against subsequent purchasers.

    The court distinguished between notice of the washing machines and notice of the agreement itself. The court stated, “The complaint alleges no more than that defendants had notice of the washing machines, not that they had notice of the agreement. There is, therefore, no allegation of constructive notice of the agreement sufficient to make section 291 inapplicable”. This distinction is crucial because it establishes that a purchaser’s awareness of physical facilities on a property does not automatically imply awareness of any underlying agreements related to those facilities.

    The court cited several prior cases, including *Bermann v. Windale Props., General Meter Serv. Corp. v. Manufacturers Trust Co.*, and *Wash-O-Matic Laundry Co. v. 621 Lefferts Ave. Corp.*, to support its holding that notice of the physical presence of equipment is not equivalent to notice of the agreement governing it. This demonstrates a consistent application of the principle that constructive notice requires knowledge of the agreement itself, not merely awareness of related physical installations.
    The court explicitly stated that, “Under sections 290 and 291 of the Real Property Law the agreement, whether a license, lease, easement or covenant running with the land, because it creates an interest in real property for longer than three years, “is void as against any person who subsequently purchases or acquires * * * the same real property * * * in good faith for a valuable consideration” (Real Property Law, § 291).”

  • Symphony Space, Inc. v. Pergola Properties, Inc., 88 A.D.2d 422 (N.Y. App. Div. 1982): Lease Assignment and Rights of Subsequent Purchasers

    Symphony Space, Inc. v. Pergola Properties, Inc., 88 A.D.2d 422 (N.Y. App. Div. 1982)

    A subsequent purchaser of property has rights superior to an assignee of a lease if the assignment refers to a later, substantively different lease that is deemed void as to the purchaser, especially if the assignment makes no mention of the original lease.

    Summary

    Symphony Space sought to enforce a lease against Pergola Properties, the purchaser of the building. Symphony Space’s claim was based on an assignment of a lease from a prior tenant, Pussycat. The assignment referred to a lease dated October 29, 1979, which omitted a crucial paragraph acknowledging an earlier lease dated April 10, 1979. Pergola’s contract to purchase the property predated the assignment. The court held that the October 29, 1979, lease was void as to Pergola and that Symphony Space, as an assignee, acquired no rights against Pergola. This was because the subsequent lease was significantly different and the assignment only referenced the later lease, not the original one.

    Facts

    Pussycat, a tenant, had a lease agreement with the property owner, including a rider paragraph recognizing an earlier lease. Pussycat then purportedly assigned a lease to Margin Call, and Margin Call assigned it to Symphony Space (plaintiff). However, the assigned lease was dated October 29, 1979, and crucially omitted the rider paragraph acknowledging the original lease. Pergola Properties contracted to purchase the building on September 19, 1979, before the assignment to Symphony Space. Pergola later acquired the property. Symphony Space sought to enforce the lease against Pergola. The assignments made explicit reference to the lease dated October 29, 1979, but made no reference whatsoever to the original lease dated April 10, 1979.

    Procedural History

    The Supreme Court initially ruled against Symphony Space. The Appellate Division affirmed the Supreme Court’s decision. The case was then appealed to the Court of Appeals.

    Issue(s)

    Whether Symphony Space, as an assignee of the October 29, 1979 lease, acquired rights to possession against Pergola Properties, the subsequent purchaser of the property, when the assignment made no reference to the original lease and Pergola’s purchase contract predated the assignment.

    Holding

    No, because the October 29, 1979 lease, which the assignment referenced, was void as to Pergola Properties, whose rights related back to the date of their contract to purchase the property (September 19, 1979), which predated the assignment.

    Court’s Reasoning

    The court focused on the fact that the assignment from Pussycat to Margin Call and then to Symphony Space only referred to the October 29, 1979, lease, which was substantively different from the original lease and lacked the rider paragraph recognizing the prior lease. The court emphasized that Pergola’s contract to purchase the property predated the assignment to Symphony Space. Therefore, Pergola’s rights as a purchaser were superior. Justice Jones, in his dissent, noted, “In any event, the assignments from Pussycat to Margin Call and from Margin Call to plaintiff made explicit reference only to the lease dated October 29, 1979, no reference whatsoever was made to the original lease dated April 10, 1979 or to any rights of the assignors thereunder.” Because the assigned lease was considered a replacement lease and lacked any reference to the original, it implied that the earlier lease had been surrendered. Consequently, Symphony Space acquired no rights against Pergola based on the assignment of the later, flawed lease.