[HN Gopher] Eight Feet Jolted a $180M Real Estate Deal
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Eight Feet Jolted a $180M Real Estate Deal
Author : jbredeche
Score : 56 points
Date : 2024-05-01 17:33 UTC (5 hours ago)
(HTM) web link (www.nytimes.com)
(TXT) w3m dump (www.nytimes.com)
| skilled wrote:
| https://archive.is/uNYgK
| pfdietz wrote:
| 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 alive. That makes it untaxable, when all sorts of other
| property is taxable. It should be possible for the city
| government to condemn that "property" and then change the
| covenant. They wouldn't even have to pay anyone, since there's no
| owner.
| bombcar wrote:
| There are procedures to strike down covenants, they just
| involve time and expense. Obviously the expense wasn't deemed
| worth it.
| pfdietz wrote:
| That's nice. It would be nicer if the time and expensive
| involved were zero.
| MereInterest wrote:
| 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.
| pfdietz wrote:
| If one holds that such covenants should not exist, then
| any cost or difficulty to remove them is a negative.
| AnimalMuppet wrote:
| I do not hold that _all_ such covenants should not exist.
| pfdietz wrote:
| That's nice. I was speaking for me, not for you.
| bombcar wrote:
| 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.
| freejazz wrote:
| Wow, big surprise. Poster who does not even seem to
| comprehend who actually owns the covenant also thinks
| that they shouldn't exist at all!
| zdragnar wrote:
| 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 property by not allowing larger buildings, but
| that's somewhat subjective (does the setback itself make the
| existing footage more desirable?).
| pfdietz wrote:
| 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.
| ghouse wrote:
| It's not severed. Still part of the real property and owned
| fee simple, but subject to use restrictions.
| pfdietz wrote:
| You did not understand what I wrote. I didn't say the
| eight foot slice was severed, I said control of the right
| to build on it was severed. That right is an abstract
| thing, but it has value, and the value is now not owned
| by anyone.
| Gare wrote:
| > 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.
| pfdietz wrote:
| 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.
| Gare wrote:
| Yeah, ideally there would be a HOA-like collective of
| owners that could change it if they all agreed.
| singleshot_ wrote:
| Democratically enacted zoning laws seem to fit the bill,
| despite lefty whining that they are racist or whatever.
| mminer237 wrote:
| They can change it if they all agree. Just the buyers are
| complaining that getting them all to agree to that is
| "very, very hard" to do.
|
| An HOA is essentially just another covenant giving you
| more flexible rules to change things.
| duxup wrote:
| I wonder if you could get them to agree to drop that
| interest?
| MereInterest wrote:
| > 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.
| MichaelZuo wrote:
| I don't think its logistically possible to negotiate with
| every relevant party in Brooklyn, or even within a half mile
| radius. It's effectively impossible to change, without
| resorting to the legislature, if that's a mandatory
| requirement.
| pc86 wrote:
| If you live a half mile away are you impact at all by a
| setback covenant being altered? If you're a neighbor you
| almost certainly are.
| MichaelZuo wrote:
| This is a normal street where people walk every day for
| their commute, of course someone living a half mile away
| who uses the street can credibly claim to experience some
| non-zero impact with a narrower sidewalk.
| ipaddr wrote:
| What about some who visits on Google street view?
| toast0 wrote:
| 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.
| jcranmer wrote:
| 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.)
| lazide wrote:
| Nope, applies generally to deeds too.
| [https://en.m.wikipedia.org/wiki/Rule_against_perpetuities]
| mminer237 wrote:
| The interests vested when the lots were first sold.
| mminer237 wrote:
| There are actual owners of the property. It's held by each
| other the other owners of the lots. They could go to their
| neighbors and buy them off to sign releases of that covenant,
| just that's hard to get each of them to agree to do.
| waiwai933 wrote:
| Anyone know why the rule against perpetuities wouldn't apply?
| Also, is there anyone who could meaningfully enforce this
| covenant? I appreciate that you wouldn't necessarily want to risk
| it anyway, but just to ensure I understand the issue here.
| tzs wrote:
| The rule against perpetuities places some limitations on the
| creation of future interests in land. The kind of covenant in
| this case doesn't create a future interest.
| drivers99 wrote:
| That was anticlimactic (based on the headline, which is an
| editor's choice, not the author's). They knew about the
| requirement and followed it, no jolting involved. The setback is
| used for a sidewalk. Probably makes more sense for it to be
| public, but that's not how the man laying out the suburb decided
| to do it.
| duxup wrote:
| 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/bkheig...
| rwmj wrote:
| In the UK you can adjust or remove covenants by paying a large
| fee to the original covenant holder. The legal theory is that
| the land without the covenant would have been worth more when
| it was originally sold, so you pay that difference. In this
| case finding the original covenant holder seems like it would
| be tricky, but in the UK most covenants were issued by councils
| [local government] when council-owned housing was sold off, so
| you'd pay the council to adjust the covenant. Our house has a
| covenant against keeping farm animals which I've not felt the
| need to remove.
| BobaFloutist wrote:
| I don't fully understand why it's so hard for a legislative body
| to eliminate such covenants.
| nobodyknowin wrote:
| 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.
| function_seven wrote:
| 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.
| russellbeattie wrote:
| 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.
| IncreasePosts wrote:
| Probably, someone who claims to be a pedestrian negatively
| affected by the lack of sunlight that was previously there.
| halestock wrote:
| I would imagine neighbors would have standing to sue for
| since it might affect their view or property values or
| something of that nature.
| mminer237 wrote:
| Every one of the neighbors holding the right under the
| covenants could sue. They could either seek damages for
| however much they could show that harms them (good luck,
| but sometimes more modern covenants will provide a minimum
| damages amount), or they could seek an equitable remedy and
| have a court order that anything built past the setback be
| torn down.
|
| If none of the neighbors care, theoretically you'd be fine
| to ignore since no one else has standing to sue, but that
| doesn't preclude the possibility that a neighbor would sell
| it someday to someone who wants to shake you down. If
| everyone's fine with it, you really should get them to give
| up their interests in the covenants.
| kayodelycaon wrote:
| 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.
| neaden wrote:
| Gift link:
| https://www.nytimes.com/interactive/2024/04/19/realestate/st...
| crazygringo wrote:
| First of all, the headline is pretty clickbaity -- from the
| article it seems quite clear that this was a case of competing
| buyers, and the 8-foot setback is some spurious justification for
| why one of the buyers didn't move fast enough.
|
| Second, many commenters here are arguing that perpetual clauses
| like this ought to be disallowed. It certainly makes sense to me
| that clauses like these ought to be converted to regular zoning
| laws that the city can then adjust as future generations deem
| necessary.
|
| But third, this particular clause _makes sense!_ You wouldn 't
| _want_ to get rid of it. All the buildings on the block have
| facades that are aligned with each other, to form a continuous
| "wall" of buildings. The last thing you want is for some random
| property owner to get to jut out 8 feet in front of all the other
| buildings. Ensuring some minimal level of architectural
| consistency on a dense city block is a _good_ thing.
|
| So keep the eight-foot setback. It makes perfect sense. But just
| convert it to be a city zoning regulation. It should be decided
| and modified if necessary via democratic means, not private
| contract.
| pc86 wrote:
| Doesn't your argument that this should be converting to a
| zoning regulate kind of negate your point that we should want
| to ensure some level of consistency on a dense city block?
| crazygringo wrote:
| No, the point is that the zoning maintains the consistency.
|
| But that if someday in the future there's a greater public
| need for something that outweights the architectural
| consistency, there's the flexibility to consider that too,
| through the existing public mechanisms of zoning changes.
|
| Like if the entire block gets purchased and torn down to put
| in a single school building, then the setback is no longer
| needed, because a new kind of consistency can take its place.
| rootusrootus wrote:
| > All the buildings on the block have facades that are aligned
| with each other
|
| What's interesting here is that in the picture they provide to
| document the 8 foot setback, the reason the buildings do not
| align with each other is because of that. Other buildings on
| the block go right up to the sidwalk.
| ok_dad wrote:
| Why do you want to limit people's property rights for looks?
| Why does a row of buildings need to be exactly aligned? This
| type of thing and HOAs are a bane upon property owners. I'm
| glad I don't have an HOA, and I'll never understand the push to
| not allow semi-organically grown cityscapes. You need some
| zoning limits, but do it Japan style rather than for looks.
| beaeglebeachh wrote:
| Yeah this is why I bought land with no HOA and no covenants
| and basically no codes and liberal zoning. Sure the roads are
| dirt 4x4 and my neighbors have livestock and wild noises at
| all times but if I wanted to regulate other land I'd buy it
| myself rather than using violence of enforcers sent in to
| stop it.
|
| If you want 8 ft setback, simple solution. Build 16 ft from
| your property line,problem solved even if your neighbor hits
| the edge.
| caseyohara wrote:
| I'd argue this is a bit different than your typical suburban
| HOA restrictions.
|
| Cities are shared spaces, and design consistency is pleasing
| to humans. Beautiful architecture and good city planning are
| obviously subjective, but aesthetically, design consistency
| creates a sense of harmony, unity, and comfort compared to a
| disjointed hodgepodge without a cohesive architectural
| through line. Functionally, it can also promote things like
| walkability and sustainability, making it a nicer place to
| live and work and visit.
|
| The 99% Invisible podcast recently had an episode about Sante
| Fe, NM. The city has strict guidelines for architecture and
| design which have ultimately been a big factor in the city's
| success as a tourist destination.
| https://99percentinvisible.org/episode/roman-mars-
| describes-...
| financltravsty wrote:
| Because some of the USA (notably the north east) still gives
| a shit about the communities where they live rather than
| embracing rugged frontier individualism a la "trust no one,
| and get yours first."
|
| Just because you own something doesn't mean you get a free
| pass to be a nuisance to others. Laws are there to keep
| society together, not to enable antisocial proclivities.
| sam1r wrote:
| So in other words, this feat was a well worthwhile hack
| noah91734 wrote:
| > Ensuring some minimal level of architectural consistency on a
| dense city block is a good thing.
|
| Check zillow. Of the 32 units for rent in Brooklyn Heights, the
| cheapest is a tiny $2,600/month studio. The median rent is
| $4,500/month, and that's for an apartment with one bedroom and
| one bathroom.
|
| No, I don't think allowing a 200 year old private rule to
| reduce living space in an age of incredible housing scarcity is
| good. I could not care less about your architectural
| consistency when it is part of the reason why people are
| sleeping on the streets and others are paying most of their
| income on rent.
| throwitaway222 wrote:
| The us is huge
| daedrdev wrote:
| And the market has shown where people would like to live
| forgetfreeman wrote:
| If by like to you mean are forced to to escape poverty...
| rwmj wrote:
| There's zero chance this particular covenant is reducing
| living space, instead it's preventing some billionaire from
| building some obnoxious entrance across the existing
| sidewalk.
| codexb wrote:
| Typically, covenants are meant to cover issues more locally
| than zoning could, like a permanent easement for the benefit of
| an adjoining property or setbacks for all the properties on one
| street to achieve a particular aesthetic. You could make them
| zoning laws, but they would be rather complex and have to refer
| to particular parcels.
|
| They can be removed, but typically you have to prove that
| removing the covenant isn't negatively impacting another
| property owner for which it was originally added. It can be
| done by unanimous agreement of the property owners, or more
| commonly, by just buying up all the adjoining properties.
| nicole_express wrote:
| Not sure why everyone is desperate in these replies to eliminate
| the setback; seems like a perfectly good outcome to have a wide
| sidewalk in an area that is likely to have a lot of pedestrian
| traffic.
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