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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

#21

Post by kayodelycaon »

BobaFloutist wrote: post #10

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

Legally, it's not hard, you just make a law. You can make an existing type of contract illegal. At that point in time, the contract (or parts of it) become unenforceable. See banning non-competent agreements.

See https://en.wikipedia.org/wiki/Shelley_v._Kraemer where the United States Supreme Court ruled the 14th amendment made "racially restrictive covenants" unenforceable.

Also, depending on the state, you might be able to get a covenant removed by a court if it has been violated for a sufficient period of time.

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

#22

Post by [deleted] »

duxup wrote: post #9

Not that there shouldn't be such restrictions in some form, but as the article mentions "It’s an agreement that was made in the past.". Makes you wonder who was involved in that agreement and if it matters now. And I wonder if this applies? https://en.wikipedia.org/wiki/Rule_against_perpetuities Semi related: Who approved those signs, all caps, that spacing? https://static01.nyt.com/images/2024/04/19/multimedia/bkhei…

[deleted]

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

#23

Post by AnimalMuppet »

pfdietz wrote: post #20
MereInterest wrote: post #16

Earlier quoted context omitted.

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.

I do not hold that all such covenants should not exist.

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

#25

Post by toast0 »

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 is the Rule against Perpetuities, that may apply. But it sounds the rule and its application is very complex in New York, so you'd likely need a lawyer very familiar with the specifics in New York to tell you if it applies to restrictive covenants in real estate deeds. My lay person understanding is the covenants in the 1905 deed were void for my house near San Jose, CA; but those were temperance covenants and didn't affect my daily use anyway.

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

#26

Post by russellbeattie »

function_seven wrote: post #19
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.…

Ah, this answers a question I had: How is a covenant enforced since it's not a law? Who would have standing for a civil suit if a 200 year old covenant was simply ignored?

So what you're saying is that others in the vicinity would be able sue to make sure the covenant was honored? I have to assume this has been tested in court many times before and upheld.

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

#27

Post by bombcar »

pfdietz wrote: post #20
MereInterest wrote: post #16

Earlier quoted context omitted.

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.

I think people may not know how many things are handled by covenants such as this.

Sure, it's a position that anything like this should be a law on the books, but it's likely a not-very-popular position.

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

#28

Post by ghouse »

pfdietz wrote: post #12
zdragnar wrote: post #7

Earlier quoted context omitted.

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.

It's not severed. Still part of the real property and owned fee simple, but subject to use restrictions.

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

#29

Post by jcranmer »

toast0 wrote: post #25
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 is the Rule against Perpetuities, that may apply. But it sounds the rule and its application is very complex in New York, so you'd likely need a lawyer very familiar with the specifics in New York to tell you if it applies to restrictive covenants in real estate deeds. My lay person understanding is the covenants in the 1905 deed were void for my house near San Jose, CA; but those were temperance covenants and…

My understanding of the Rule against perpetuities is that it only applies to inheritance, not general real estate transactions, so covenants can't violate the rule.

(Of course, rule against perpetuities is so difficult to apply correctly that some courts have ruled it's not legal malpractice for a lawyer to screw it up.)

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

#30

Post by pfdietz »

AnimalMuppet wrote: post #23
pfdietz wrote: post #20

Earlier quoted context omitted.

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

I do not hold that all such covenants should not exist.

That's nice. I was speaking for me, not for you.
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