A deed to property in Queens County, New York, was purportedly executed in 2005 by Diana Deramo and Nicholas Deramo, the record owners. The property was re-conveyed twice, and it was mortgaged. However, Nicholas had died in 2003 and Diana alleged that her signature was also forged. Diana, individually and as the proposed executrix of the Estate of her husband, sought to set aside the 2005 deed, and the subsequent deeds and mortgages executed by the grantees under those deeds. Wells Fargo, Bank N.A., as Trustee, moved for summary judgment dismissing the complaint, asserting that a judgment entered in the foreclosure of the mortgage it held could only be vacated by the grant of a motion to vacate the judgment. The Supreme Court, Queens County, granted that motion and denied the Plaintiff’s cross-motion for summary judgment. The Appellate Division, Second Department, modifying the lower court’s Order, denied Wells Fargo’s motion and granted the Plaintiff’s motion.
According to the Appellate Division, “[a] deed based on forgery or obtained by false pretenses is void ab initio, and a mortgage based on such a deed is likewise invalid”. Therefore, the court held that the 2005 deed was null and void, and it set aside that deed, the subsequent deeds, and the mortgages executed by the grantees of those deeds. No triable issue of fact was presented in support of the validity of the 2005 deed, and neither the Plaintiff nor the decedent was named in the mortgage foreclosure. Deramo v. Laffey, 2017 NY Slip Op 02772, decided April 12, 2017, is posted at http://www.nycourts.gov/reporter/3dseries/2017/2017_02772.htm.
Recording of a Deed is Not Necessary to Transfer Title
When the plaintiff sold a 15.94 acre parcel of vacant land in 2005, the buyer granted the plaintiff a 10-year option for the re-conveyance of a 3.5 acre portion of the land. The option agreement was recorded. In 2005, the entire parcel was conveyed to defendants Ronald and Linda LaPorte, who in 2011 transferred the property to Roustabout Resources, LLC (“Roustabout”). Upon learning of the 2011 transfer, the Plaintiff advised the LaPortes and Roustabout that it was exercising its option and commenced an Action for specific performance. The Supreme Court, Rensselaer County, New York, granted the Plaintiff’s cross-motion to the extent of directing Defendant Roustabout to execute a deed to the Plaintiff within thirty days. The Appellate Division, Third Department, affirmed the ruling of the lower court.
Roustabout asserted that it could not convey the option parcel because New York State’s Real Property Transfer Report (RP-5217), the completion of which necessitated a subdivision which had not been obtained, and New York’s State’s transfer tax form (TP-584) were not available. However, there were no conditions to performance under the option agreement, such as a requirement to obtain subdivision approval; all that was required was a written notice of the exercise of the option within the option period. Further, according to the Appellate Division, “…title to property vests upon the execution and delivery of the deed…, and the fact that the deed may not be recorded until a later date-or at all- does not affect the validity of the conveyance [citations omitted].” Tomhannock, LLC v. Roustabout Resources, LLC, 2017 NY Slip Op 02712, decided April 6, 2017, is posted at
Reversion of Title Extinguished but Restriction on Use of the Land is Enforceable
Under New York Real Property Law’s Section 345 (“Recording of a declaration of intention to preserve certain restrictions on the use of land”), “a condition subsequent or special limitation restricting the use of land and the right of entry or possibility of reverter created thereby shall be extinguished and become unenforceable, either at law or in equity, and if the condition has been broken or the reverter has occurred the right of entry therefor shall become unenforceable and the possessory estate resulting from the occurrence of the reverter shall be extinguished, unless within the time specified in [Section 345] a declaration of intention to preserve it is recorded as provided in this section…”
In 1976, the Plaintiff and the Defendant entered into an agreement requiring that the Defendant “shall maintain and operate a Catholic high school in and upon the entire premises…” Further, under the agreement, the Defendant was “to have and to hold the same so long as the [Defendant] continues the operation of a Roman Catholic high school upon the premises, ...upon the cessation of which all rights, title and interest herein conveyed shall revert to the [Plaintiff]”. In 2013, the Plaintiff commenced an Action for a declaratory judgment that the covenant was valid and enforceable and that the Defendant was required to re-convey the property to the Plaintiff if the property was not used as a Catholic high school, that the covenant prevented the Defendant from using any portion of the property for any other purpose, and for damages for breach of contract. The Supreme Court, Queens County, New York, granted the Defendant’s motion to dismiss the cause of action for a ruling that the provision for the reversion of title was enforceable, and denied the Defendant’s motion to dismiss the cause of action seeking a ruling that the restriction on use is enforceable. The Appellate Division, Second Department, affirmed.
According to the Appellate Division, the provision for the reversion of title “was extinguished pursuant to Real Property Law Section 345 as the result of the plaintiff’s undisputed failure to comply with the recording requirements…” However, “[t]he provision in the 1976 Agreement restricting the defendant from using any portion of the property for any purpose other than the operation of a Catholic high school created a restriction on use without a reversionary right”. There remained questions of fact as to whether the Plaintiff waived its right to enforce the use restriction or was estopped by its failure to object to prior violations. Roman Catholic Diocese of Brooklyn, New York v. Christ the King Regional High School, 2017 NY Slip Op 03029, decided April 19, 2017, is posted at http://nycourts.gov/reporter/3dseries/2017/2017_03029.htm.
Corporate Officers May be Personally Liable for Filing of a Willfully Exaggerated Mechanic’s Lien
Under New York Lien Law’s Section 39 (“Lien willfully exaggerated is void”), “…if the court shall find that a lienor has willfully exaggerated the amount for which he claims a lien as stated in his notice of lien, his lien shall be declared to be void…” In an Action to recover sums alleged to be unpaid for which mechanics’ liens were filed, the Defendant property owner asserted claims of willful exaggeration against officers of the mechanics, claiming the liens they had verified added amounts for work that was not performed. The Supreme Court, New York County, New York, denied motions to dismiss the claims against the officers, holding that a claim had been stated based on the “commission of a tort” doctrine. “Courts have specifically held that corporate officers may be held personally liable if they participated in the tortious conduct of filing a willfully exaggerated mechanic’s lien…on behalf of the corporation”. Power Air Conditioning Corp. v. Batirest 229 LLC, 2017 NY Slip Op 30750, decided April 13, 2017, is posted at http://nycourts.gov/reporter/pdfs/2017/2017_30750.pdf.