Developer sought to extinguish deed restriction on Upper West Side property. The City, through the Department of Housing Preservation and Development’s Asset Sales Program, sold 330 West 86th Street in Manhattan to the building’s tenants. Because the property had been designated as an Urban Development Action Area Project, the deed stated that the tenants could only rehabilitate or conserve the existing dwellings, or construct new dwellings permitted by existing zoning laws. The deed also required the tenants to remove all building code violations and hazardous conditions. The tenants, rather than correcting the violations, sold the property to 330 West 86th Street LLC, a developer who allegedly sought to demolish the building to construct a high-rise apartment building.

The Court of Appeals subsequently held that the deed restriction could be enforced against the developer. The developer then commenced new litigation seeking a declaration that the deed restriction was now extinguished because the premises had been rehabilitated. The City argued that the deed restriction remained intact because the City’s long-term goal of improving the availability and affordability of quality housing was intended by the parties to be part of the deed when the City conveyed the property to the tenants. The lower court denied motions for summary judgment, and the First Department affirmed, ruling that questions of fact remained as to whether the developer fully rehabilitated the property as required under the deed, and whether the City’s long-term goal could be inferred from the deed.

330 West 86th Street LLC v. City of New York, 2009 N.Y. Slip Op. 09380 (1st Dep’t Dec. 17, 2009) (Attorneys: Edward B. Safran, for developer; Michael A. Cardozo, Tahirih M. Sadrieh, for City).