CONDEMNATION’S MIGHTY HAND

It surprises some that eminent domain in New York can be utilized to acquire property interests other than real estate fee title and trade fixtures.  Section 103(F) of the Eminent Domain Procedure Law (EDPL) defines real property as including “all land and improvements, …all easements and hereditaments, corporeal or incorporeal, and every estate, interest and right, legal or equitable, in lands or water, and right, interest, privilege, easement and franchise relating to the same, including terms for years and liens by way of mortgage or otherwise.”

Section 708 of the EDPL allows a condemnor to acquire property other than real property in the maner and procedure prescribed by the EDPL.  This includes personal property and intangible and incorporeal rights.

The leading case is Kaufmann’s Carousel v City of Syracuse Indus. Dev. Agency, 301 AD2d 292 (4th Dept 2002) aff’d 99 NY2d 508 (2003).  In the Carousel case, the condemnor condemned portions of leasehold interests held by anchor tenants in a shopping mall to pursue a new development plan.  The Court upheld the ability to acquire portions of the leases which were in favor of the tenants which restricted the use of land outside the existing mall building.  The Court relegated the plaintiff tenants to claim for monetary damages after acquisition.

Section 708 has been utilized to condemn and preserve an historic carousel.  Nunley’s Amusement Corp. v County of Nassau, 266 AD2d 292 (2d Dept 1999).

What brought this subject to mind was a recent case.  The case involved a situation where property owners executed a contract to sell two parcels to a town.  Except, the deeds to the owner contained a right of first refusal to the grantor to the current owner.  An action was brought by the contract vendor for a declaratory action holding that the right of first refusal was to a stranger to the deed and does not create a valid interest in favor of that party.  In an extensive and scholarly decision, Supreme Court Justice Thomas F. Whelan (no stranger to title law) ruled that the right of first refusal was not a reservation in the deed, but a valid contractual right which was valid and enforceable.  Peters v Smolian, 49 Misc3d 408 (Sup. Ct. Suff. 2015).  The Appellate Division affirmed 154 AD3d 980 (2d Dept 2017).

My advice to any town or municipality in similar circumstances is to simply condemn the right of first refusal.

 

Posted in EDPL Section 708, Personal Property, Right of First Refusal
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