Real Property Law

In an action by landowner to quiet title to Brooklyn property under the Williamsburg Bridge, the city appealed from Supreme Court’s grant of summary judgment quieting title in the landowner. The Appellate Division reversed, holding that the city held an easement to the disputed land.
In 1983, the City conveyed the disputed property to a private owner, reserving an easement to the disputed property for maintenance of the Williamsburg Bridge. That deed, and a subsequent deed between private owners that recognized the easement, were properly recorded. Then, in 1992, the State exercised its eminent domain power to acquire title for the benefit of the City. However, the notice of appropriation was erroneously recorded against a different parcel, and the City continued to send tax notices to the prior owner. In 2019, current owner acquired title at a tax foreclosure sale. Although the judgment of foreclosure and the terms of sale indicated that the sale was subject to all easements, the referee’s deed did not reference any easements or indicate that the conveyance was subject to easements. Current owner then brought this action to quiet title, and Supreme Court granted landowners summary judgment declaring that it enjoyed the exclusive right to possession and enjoyment. The City appealed.
In reversing, the Appellate Division held that because of the language in the judgment of foreclosure and terms of sale, the referee did not have authority to convey the parcel free of the City’s easement. Moreover, because the easement was recorded in the prior deeds, the current owner was on constructive notice of the easement. As a result, the court declared that the owner’s title was subject to the city’s easement.
Comment
A tax sale purchaser generally takes title subject to easements created before the tax levy. For example, in Jackson v. Smith, 153 AppDiv 724, the court held that the easement rights of adjoining property owners could not be extinguished by a judgment of foreclosure providing that the tax lien was “not subject to any claim, easement, charge, incumbrance or interest of any kind…” The adjoining owners had acquired, by deed, easements of light, air, and access over the tax delinquent property, and the court held that if those easement rights were to be extinguished by a tax sale, it would result in a taking or property without due process. As a result, the court held that the judgment of foreclosure would be modified to provide that the sale be made subject to the easements. If the tax levy precedes creation of the easement, the sale could potentially cut off the easement, but not if the foreclosure judgment expressly makes the sale subject to existing easements. In Pagano v. Kramer, 21 NY2d 910, the court held that a tax foreclosure sale did not extinguish a prescriptive easement even though the judgment of foreclosure was on tax liens for the property for the years 1899 to 1909, long before the prescriptive easement was established. The court emphasized that the tax deed stated that the conveyance was subject to a right-of-way easement, and held that the language in the deed could not create a new easement, but did operate to preserve the existing easement by prescription “which might otherwise have been extinguished by the tax foreclosure sale.”

Although a tax foreclosure sale does not extinguish an existing easement, courts generally allow a purchaser to rescind its bid or vacate a foreclosure sale based on a failure to disclose the existence of an encumbrance. In Lane v. Chantilly Corp., 251 NY 435, the court relieved a foreclosure sale purchaser of its obligation to purchase when a survey revealed that the building encroached on the street. Even though the terms of the foreclosure sale provided that the sale was subject to any state of facts a survey would show, the court distinguished the case from an arms length purchase and indicated that court had discretion to relieve buyers of foreclosure sale purchaser that the buyer would not have made if all the facts had been known. See also, SRP 2012-4, LLC v. Darkwah, 198 A.D.3d 938.