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Eight Feet Jolted a $180M Real Estate Deal

nytimes.com

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Re: Eight Feet Jolted a $180M Real Estate Deal

#11

Post by Gare »

pfdietz wrote: post #3

I think a case can be made that covenants like this should be disallowed. Sure, allow contracts to be signed, where if a condition is violated then a penalty can be paid. But here? There's no one to buy off to relax the constraint. It's held in perpetuity by the dead hand of the past. To put it another way: there's a property right here (in that setback) that is just sort of floating in the air, not owned by anyone a…

> There's no one to buy off to relax the constraint. It's held in perpetuity by the dead hand of the past.

It's also held indirectly by owners of other properties which sale hinged on that restriction applying to all the properties on the street.

Re: Eight Feet Jolted a $180M Real Estate Deal

#12

Post by pfdietz »

zdragnar wrote: post #7
pfdietz wrote: post #3

I think a case can be made that covenants like this should be disallowed. Sure, allow contracts to be signed, where if a condition is violated then a penalty can be paid. But here? There's no one to buy off to relax the constraint. It's held in perpetuity by the dead hand of the past. To put it another way: there's a property right here (in that setback) that is just sort of floating in the air, not owned by anyone a…

Setbacks are part of the property that is still owned by the school. Schools don't (currently) pay property taxes in New York, but whoever buys the buildings will still owe taxes on the property, including the setback. One of the potential buyers are trying to stop the sale to a different buyer, so the setback isn't at issue. The most one could say is that the setback diminishes the potential taxable value of the pro…

Yes, I understand taxes are still owned on the property itself. But the right embodied in the covenant is another form of property that has been severed from the real property. That right has value (and this value is reflected in the reduced value of the actual property it applies to), but is not now subject to taxation.

Re: Eight Feet Jolted a $180M Real Estate Deal

#13

Post by pfdietz »

Gare wrote: post #11
pfdietz wrote: post #3

I think a case can be made that covenants like this should be disallowed. Sure, allow contracts to be signed, where if a condition is violated then a penalty can be paid. But here? There's no one to buy off to relax the constraint. It's held in perpetuity by the dead hand of the past. To put it another way: there's a property right here (in that setback) that is just sort of floating in the air, not owned by anyone a…

> There's no one to buy off to relax the constraint. It's held in perpetuity by the dead hand of the past. It's also held indirectly by owners of other properties which sale hinged on that restriction applying to all the properties on the street.

It's this dispersed ownership I'm objecting to. Ultimately it's indistinguishable from being a citizen living in a region. We have a way of representing such collectives: the government of that region. Only here, we have a law that's effectively undemocratic.

Re: Eight Feet Jolted a $180M Real Estate Deal

#14

Post by duxup »

Gare wrote: post #11
pfdietz wrote: post #3

I think a case can be made that covenants like this should be disallowed. Sure, allow contracts to be signed, where if a condition is violated then a penalty can be paid. But here? There's no one to buy off to relax the constraint. It's held in perpetuity by the dead hand of the past. To put it another way: there's a property right here (in that setback) that is just sort of floating in the air, not owned by anyone a…

> There's no one to buy off to relax the constraint. It's held in perpetuity by the dead hand of the past. It's also held indirectly by owners of other properties which sale hinged on that restriction applying to all the properties on the street.

I wonder if you could get them to agree to drop that interest?

Re: Eight Feet Jolted a $180M Real Estate Deal

#15

Post by MereInterest »

pfdietz wrote: post #3

I think a case can be made that covenants like this should be disallowed. Sure, allow contracts to be signed, where if a condition is violated then a penalty can be paid. But here? There's no one to buy off to relax the constraint. It's held in perpetuity by the dead hand of the past. To put it another way: there's a property right here (in that setback) that is just sort of floating in the air, not owned by anyone a…

> But here? There's no one to buy off to relax the constraint. It's held in perpetuity by the dead hand of the past.

I'd agree that there no one specific with whom you could re-negotiate the condition, but that doesn't mean there is "no one". It means that the negotiation must involve everybody who has made decisions based on the presence of the covenant, and who would be negatively impacted by it.

As others have mentioned, there are procedures in place that could strike down a covenant. It isn't the "dead hand of the past" that is being protected. It's the current homes of the living.

Re: Eight Feet Jolted a $180M Real Estate Deal

#16

Post by MereInterest »

pfdietz wrote: post #8
bombcar wrote: post #5

Earlier quoted context omitted.

There are procedures to strike down covenants, they just involve time and expense. Obviously the expense wasn't deemed worth it.

That's nice. It would be nicer if the time and expensive involved were zero.

Why would "zero" be the ideal price? A price of zero would mean that everybody who wants the covenant to remain in place would need to constantly be on their guard for a hypothetical overly aggressive developer who wants to change it.

Having a non-zero price means that the developer can't just drag out the same argument again and again, trying to overturn the same covenant. Having minimum notice periods and public comment periods means that the developer can't just raise and force the issue in a single meeting over the holidays.

Re: Eight Feet Jolted a $180M Real Estate Deal

#17

Post by Gare »

pfdietz wrote: post #13
Gare wrote: post #11

Earlier quoted context omitted.

> There's no one to buy off to relax the constraint. It's held in perpetuity by the dead hand of the past. It's also held indirectly by owners of other properties which sale hinged on that restriction applying to all the properties on the street.

It's this dispersed ownership I'm objecting to. Ultimately it's indistinguishable from being a citizen living in a region. We have a way of representing such collectives: the government of that region. Only here, we have a law that's effectively undemocratic.

Yeah, ideally there would be a HOA-like collective of owners that could change it if they all agreed.

Re: Eight Feet Jolted a $180M Real Estate Deal

#18

Post by nobodyknowin »

BobaFloutist wrote: post #10

I don't fully understand why it's so hard for a legislative body to eliminate such covenants.

Basically yeah, it take legislation. Like the Civil rights act immediately struck down all of the racist covenants (that still exist but are unenforceable).

So maybe a municipal action could do something similar?

Of course the easiest way to not deal with covenants like this is don't buy property with them. Condos have tons and I will never live in one.

Re: Eight Feet Jolted a $180M Real Estate Deal

#19

Post by function_seven »

BobaFloutist wrote: post #10

I don't fully understand why it's so hard for a legislative body to eliminate such covenants.

Because constituents will often fight such an attempt. For every covenant that's annoying you, there are people in the vicinity that like it.

People generally like setbacks. It prevents their neighbors from being too close, or the street getting crowded in. Property owners might want to develop along the edges, but their neighbors may not want them to.

So clearing these covenants out wholesale is going to be a fight. And going through the legislative process for a single property is really inefficient.

Re: Eight Feet Jolted a $180M Real Estate Deal

#20

Post by pfdietz »

MereInterest wrote: post #16
pfdietz wrote: post #8

Earlier quoted context omitted.

That's nice. It would be nicer if the time and expensive involved were zero.

Why would "zero" be the ideal price? A price of zero would mean that everybody who wants the covenant to remain in place would need to constantly be on their guard for a hypothetical overly aggressive developer who wants to change it. Having a non-zero price means that the developer can't just drag out the same argument again and again, trying to overturn the same covenant. Having minimum notice periods and public co…

If one holds that such covenants should not exist, then any cost or difficulty to remove them is a negative.
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