two housesOn April 5, 2017, in an Article 78 proceeding, Tavano v. Zoning Board of Appeals of the Town of Patterson, 2017 NY Slip Op 02661, the Second Department reversed a trial court decision and reinstated a decision of the Zoning Board of Appeals of the Town of Patterson.  The zoning board had granted petitioner Tavano’s application to establish a legal non-conforming use of a second building on his property, referred to as the “cottage.”

Tavano argued that the cottage located at his property was a leased residential dwelling and that its use preexisted the Town’s 1942 zoning ordinance, which provided that “a building, structure, or premises could be used as a rooming or boarding house so long as there were no more than three boarders or roomers.”  Id.

In reversing the trial court’s finding, the Appellate Division noted that petitioner owned property in Brewster that is improved with a single family dwelling constructed in 1947 and a cottage constructed in 1955.  Tavano lived in the single family dwelling and rented the cottage.

Although the Appellate Division did not affirmatively state that its decision rested on the fact that the cottage was constructed in 1955, well after the 1942 zoning ordinance was enacted, and thus, Tavano could not establish entitlement to a legal nonconforming use, the Court did state that “to establish a legal nonconforming use, a property owner must demonstrate that the allegedly preexisting use was legal prior to the enactment of the zoning ordinance that purportedly rendered it nonconforming.”

Here, and without benefit of the trial court opinion, it appears that the relevant question was not only whether the cottage was constructed prior to enactment of the 1942 ordinance, but also whether Tavano’s use of the cottage constituted use as a rooming or boarding house.

In reinstating the zoning  board’s decision, the Appellate Division relied upon the long-standing legal principle that ‘[t]he determination of a zoning board regarding the continuation of a preexisting nonconfirming use must be sustained if it is rational and supported by substantial evidence, even if the reviewing court would have reached a different result”

Consequently, and as all land use lawyers will attest, even if the trial court or reviewing court would have reached a different result than that zoning board, deference is to be afforded to the zoning board.  Finding that the “ZBA’s determination that the cottage did not constitute a rooming or boarding house under the 1942 zoning ordinance was not arbitrary or capricious”, the Appellate Division reversed the trial court and reinstated the zoning board’s decision.

office spaceOn February 20, 2017, our colleagues blogged about Ader v. Guzman, 135 AD3d 668 [2d Dept. 2016] and a guidance letter subsequently issued by the NYS Department of State (NYSDOS). At issue was the responsibility of a real estate broker to have a working knowledge of the property being marketed, including land use and zoning restrictions. The Court held that a broker has no duty to investigate whether there is a valid rental permit for the residential rental property. The NYSDOS, which licenses real estate brokers and salespersons in New York, reached a different conclusion, noting that the failure of a broker to have a working knowledge of the site could violate the broker’s obligations under the Real Property Law §§ 441 and 441-c.

On Wednesday, March 29, 2017, we presented a program to the Commercial Industrial Broker Society of Long Island (CIBS) about Land Use and Environmental Pitfalls for Real Estate Agents and Brokers that dealt with the Ader/NYSDOS issue. We also discussed NYS’s Tenant Notification Law and other potential environmental and land use traps that could adversely impact realtors.  Please click here for a copy of our power point presentation.  We hope you enjoy it!

Municipalities on Long Island are struggling to control rental properties. In Southampton, rental properties are governed by Chapter 270 of the Southampton Town Code (the “Code”). Section 270-3 of the Code establishes that an owner of a residential property shall not permit or allow its use or occupancy as a rental without first obtaining a permit. If an owner does rent without a permit, section 270-13(a) of the Code prohibits the owner’s collection of rent.

In Schwartz v. Torrenzano, 49 Misc.3d 943, 16 N.Y.S.3d 697, (Suffolk Co. 2015), the Supreme Court held that Southampton’s rental permit law creates a private cause of action allowing, in certain circumstances, a tenant to recoup rent paid to its landlord. The trial court’s holding in Schwartz was recently cited with approval by the Appellate Division, Second Department in Ader v. Guzman, 135 A.D.3d 671, 23 N.Y.S.3d 292 (2d Dept. 2016).

In Ader, tenants demanded the return of their rent after discovering that their summer rental lacked a permit. The Appellate Division, relying in part upon Schwartz, affirmed the Supreme Court’s holding that the Code affords tenants an implied private right of action and that the Ader lease was unenforceable. The Appellate Division held that because Southampton’s rental permit law is intended to protect the public health and prevent fraud, enforcing the illegal lease and permitting the landlord to keep the tenants’ rent violates public policy.

In a companion case, Ader v. Guzman & Corcoran Realty Group, LLC, et al., 135 A.D.3d 668, 22 N.Y.S.3d 576 (2d Dept. 2016), the Appellate Division held that Real Property Law §443(4)(b) does not impose a duty upon real estate brokers to investigate whether a rental property is properly permitted. Despite the Court’s holding, the New York State Department of State, in a guidance letter dated April 19, 2016, cautioned that “notwithstanding the decision in Guzman, a broker who fails to demonstrate a working knowledge of the property being marketed, fails to demonstrate the level of competency required to transact business as a licensee in violation of Real Property Law §§441 and 441-c.” The Department further warned that a broker’s commission “premised upon an unlawful agreement is ‘unearned’ in violation of Real Property Law §441-c.”

It is clear that from the Department’s perspective that brokers must make reasonable efforts to verify the legal status of the properties they offer and that, where a broker has actual knowledge that a property lacks a permit or is otherwise illegal, such information must be affirmatively disclosed.