U & Me Homes, LLC v County of Suffolk
Categories
Attorneys and Parties
Brief Summary
Real estate and land-use dispute over whether an environmentally protective restrictive covenant barred residential development and remained enforceable against a later purchaser.
The Supreme Court, Suffolk County, granted the plaintiff summary judgment on its claim that the restrictive covenant did not run with the land, sua sponte declared that enforcement would be an unconstitutional per se taking, denied the defendants' cross-motions, and entered judgment declaring the covenant void and of no legal effect.
The Appellate Division reversed the judgment declaring the covenant void, denied the plaintiff summary judgment on the fourth cause of action, and granted the defendants summary judgment on the second, third, and fourth causes of action. It left only the first cause of action under RPAPL 1951 [statute allowing a court to declare a restrictive covenant unenforceable after balancing the equities where it provides no actual and substantial benefit to the party seeking enforcement] for further proceedings.
The appellate court held that, although the deed did not expressly say the covenant ran with the land, the surrounding circumstances showed that the parties intended it to do so because the parcel was sold with no development rights to protect groundwater and preserve an environmentally sensitive area. The court also found no merger extinguishment because the County's tax deed took title 'with all restrictions' and the owner later redeemed the parcel subject to existing restrictions, and it found the County had authority to impose the covenant as a condition of the auction sale. However, the defendants did not show as a matter of law that the equities defeated the plaintiff's RPAPL 1951 claim.
Background
In 1994, Suffolk County acquired a parcel in Southampton located within the South Fork Special Groundwater Protection Area and the Town's Aquifer Protection Overlay District. In 2000, the County sold the property at public auction to BPC Holding, Inc. and the deed stated that there were no development rights except for the right to construct a 50-foot westward extension of Laurel Valley Drive, subject to Town approval. The property later passed through several owners. In 2009, the County reacquired the parcel by tax deed after Route 58 Holdings, LLC failed to pay taxes, and in 2010 Route 58 redeemed the property and received it back by quitclaim deed. The property was eventually conveyed to U & Me Homes, LLC in 2013. The plaintiff claimed it did not discover the restrictive covenant before closing and later was denied a building permit to construct a home because of the covenant. It then sued for declarations that the covenant was unenforceable, did not run with the land, was unauthorized under the Suffolk County Code, and had been extinguished by merger.
Lower Court Decision
The Supreme Court, Suffolk County, granted the plaintiff's motion for summary judgment on the fourth cause of action, holding in substance that the restrictive covenant did not run with the land. The court also sua sponte declared that enforcing the covenant would constitute an unconstitutional taking per se, denied the separate cross-motions for summary judgment by the County defendants and the Town defendants, and entered judgment declaring the restrictive covenant void and of no legal effect.
Appellate Division Reversal
The Appellate Division dismissed the appeals from the order because the right to direct appeal ended upon entry of judgment and because no appeal as of right lay from the sua sponte portion under CPLR 5701(a)(2) [rule limiting appeals as of right to orders deciding motions made on notice]. On the merits, it reversed the judgment. The court held that the defendants established that the restrictive covenant was intended to run with the land, that the merger doctrine did not extinguish it after the 2009 tax deed and redemption, and that the County was authorized to include it in the 2000 deed. It therefore granted the defendants summary judgment on the second, third, and fourth causes of action and denied the plaintiff summary judgment on the fourth cause of action. The court agreed, however, that summary judgment was properly denied on the first cause of action under RPAPL 1951 [statute allowing a court to declare a restrictive covenant unenforceable after balancing the equities where it provides no actual and substantial benefit], because the defendants failed to show that the equities necessarily favored continued enforcement. The matter was remitted for further proceedings and entry of appropriate declarations.
Legal Significance
The decision reinforces that a restrictive covenant may run with the land even without explicit deed language if the instrument and surrounding circumstances show such intent. It also confirms that a county tax-deed reacquisition followed by redemption does not automatically extinguish a covenant by merger when title is conveyed 'with all restrictions.' In addition, it recognizes a municipality's authority to impose development-limiting deed restrictions as conditions of a public auction sale of environmentally sensitive property. At the same time, it preserves the availability of relief under RPAPL 1951 [statute allowing a court to declare a restrictive covenant unenforceable after balancing the equities where it provides no actual and substantial benefit], where factual issues remain on equitable balancing.
Environmental deed restrictions can remain binding on later purchasers when the sale history and surrounding facts show they were meant to permanently limit development, and a temporary tax-deed transfer back to the County will not necessarily erase them. But whether such a covenant should still be enforced under RPAPL 1951 [statute allowing a court to declare a restrictive covenant unenforceable after balancing the equities where it provides no actual and substantial benefit] may still require a fact-specific equity analysis.