New York Court Denies Summary Judgment in Action to Enforce a Restrictive Covenant

The New York Supreme Court, Kings County, recently denied a property owner’s motion for summary judgment, holding that there were issues of fact as to whether a restrictive covenant applied to the property at issue. See Fenimore Civic Block Ass’n Inc. v. 1919 Bedford Realty LLC, (N.Y. Sup. Ct. Mar 31, 2021). In the case, Defendant purchased a corner lot (the “Property”) with the intent of constructing three four-story apartment buildings thereon. According to Defendant, a title search completed before Defendant acquired the Property did not reveal any encumbrances, defects, or restrictions to the use of the Property. Moreover, the title search indicated that both streets abutting the Property were zoned “R6,” which allowed for multifamily residential buildings. In connection with its development plan, Defendant’s application to convert the Property into three lots was approved by the NYC Department of Finance. After Defendant received a demand letter from Plaintiffs’ counsel to cease and desist, Defendant conducted a public record search and discovered that the original deed contained a provision restricting the use of the Property for “one family only.” However, for at least 50 years, the deeds conveying ownership of the Property did not contain the deed restriction. Plaintiffs brought an action to enforce the restrictive covenant within the original deed. Defendant filed a counterclaim to terminate the restriction and moved for summary judgment dismissing Plaintiffs’ complaint for lack of standing. Plaintiffs then cross-moved for a declaratory judgment to enforce the restrictive covenant.

Defendant’s motion and Plaintiffs’ cross-motion were both denied.  The Court noted that to determine the relief requested, the Court must consider “whether the subject property is part of a general scheme or plan of development and [if] defendant had notice, at the time the subject property was purchased, of the common scheme or plan.” First, the Court held that there were issues of fact as to whether the restrictive covenant applied to the Property. Relying on Lefferts Manor Ass'n, Inc. v. Fass, 211 N.Y.S.2d 18 (Sup. Ct. 1960), which addressed the same restrictive covenant at issue, the Court found that as a matter of law, the Property was embraced by a general plan of development through “clear and definite proof.” However, a public record search conducted by Defendant revealed that the neighborhood covered by this general plan included the north side of the Fenimore Street, but not the south side (where the Property is located).  In so holding, the Court noted that zoning and historic district designations are not dispositive as to the limitations of use imposed by restrictive covenants. Second, the Court found that the inclusion of restrictive language in the deeds of neighboring properties raised an issue of fact as to Defendant’s actual or constructive notice of the restricted use of the Property. Based on the foregoing, the Court found that it was premature to render a judgment regarding the restrictive covenant and whether the construction on the Property was prohibited.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com, Michael Crowley at mcrowley@riker.com, Desiree McDonald at dmcdonald@riker.com, or Andrew Raimondi at araimondi@riker.com.