Posted by: Patricia Salkin | July 18, 2017

NY Appellate Court Finds Development Rights Constitute Real Property for Purposes of RPAPL 1602

Plaintiffs Thomas G. Hahn, Jr., Jeanne Halstead, and Barbara Butts, and the defendant, Johanne Hagar, were siblings, who owned a 101–acre farm, known as the “Hahn Farm,” located in the Town of Pleasant Valley, Dutchess County. The property, had been in the parties’ family for more than 240 years, and was owned jointly by their parents until their father’s death in 1995, and then solely by the parties’ mother, Edna Hahn, until her death. Edna Hahn’s will conferred a qualified life estate in the property upon Thomas G. Hahn, Jr., and left the remainder interest to her four children in equal shares. The plaintiff Thomas G. Hahn, Jr., who holds a qualified life estate in the property, and two of his sisters, who hold remainder interests, sought authorization pursuant to RPAPL 1602 to sell the development rights to the property in order to preserve its future use as a farm.

Although the parties stipulated to a definition of “development rights,” the court found that the specific rights or burdens broadly referred to by this term could vary according to contractual terms or applicable governing statutes. The court held that development rights, as defined by the parties, constituted “real property, or a part thereof,” for purposes of RPAPL 1602. Despite this, the court affirmed the dismissal of the cause of action because the plaintiffs failed to establish that the proposed sale of development rights would be expedient. Specifically, the plaintiffs failed to present any evidence of a proposed buyer for the development rights or the value of the underlying property with and without the development rights. Additionally, plaintiffs failed to present evidence of any other tangible or intangible benefit that could be achieved by a sale of the development rights, or that the sale of the development rights was necessary to preserve the property as an asset. Accordingly, the court held that the Supreme Court properly directed the dismissal of the cause of action pursuant to RPAPL 1602.

Hahn v Hager, 2017 WL 3045806 (NYAD 2 Dept. 7/19/2017)

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