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Home > Underwriting > Title News > Twenty Volume Three

SERIES: Twenty VOLUME: Three DATED: March, 2005

~ DEPARTMENT OF SOCIAL SERVICES LIEN ON REAL PROPERTY UPHELD ~

In a recent decision, Tibby v. Fletcher (Appellate Division, Third Department, decided December 16, 2004), the appellate court upheld a lower court dismissal of a RPAPL Article 15 quiet title action in a case involving a Department of Social Services lien with the following decision:

"Pearl Fletcher (hereinafter decedent) owned approximately 120 acres of land in the Town of Andes, Delaware County. In 1992, upon her admission to a County-owned nursing home facility, decedent became a ward of the Delaware County Department of Social Services and granted a power of attorney to respondent Delaware County Commissioner of Social Services which was recorded in November 1992. Thereafter, in February 1993, decedent executed an assignment of proceeds of liquidation of her property in favor of the Department as consideration for the medical care and assistance she then was receiving. In the interim, decedent also granted a power of attorney to her grandson, Frederick Fletcher, which was recorded in August 1993.

Thereafter, defendants John A. McShane and Nancy J. McShane asserted title to a two-acre portion of decedent's property and commenced an action pursuant to RPAPL article 15 to quiet title thereto. To resolve this action, the Commissioner, still holding decedent's power of attorney, conveyed the two-acre parcel to the McShanes for $1,500 by a deed dated March 13, 1995 and recorded April 14, 1995.

Subsequent thereto, by deed dated April 21, 1995 and recorded April 24, 1995, Frederick Fletcher, also still holding a power of attorney for decedent, executed a deed that purported to convey decedent's property - including the two-acre parcel previously conveyed to the McShanes - to his mother, defendant Ruth M. Fletcher, for nominal consideration. In September 1996, plaintiffs contracted to purchase such property from Ruth M. Fletcher. After paying the back taxes and providing a down payment and promissory note, plaintiffs received a deed to the property in October 1996. Such deed was not recorded, however, until May 1997.

In the interim, in December 1996, the Commissioner commenced an action against Frederick Fletcher and Ruth Fletcher alleging, inter alia, that the conveyance from decedent to Ruth Fletcher was fraudulent within the meaning of Debtor and Creditor Law § 273. Supreme Court (Mugglin, J.) granted the Commissioner's subsequent motion for summary judgment and declared the underlying conveyance void. Plaintiffs thereafter commenced these actions pursuant to RPAPL article 15 to quiet title to the property. Following joinder of issue, discovery and various motions for summary judgment, Supreme Court found that plaintiffs were not bona fide purchasers for value and dismissed plaintiffs' complaints. These appeals by plaintiffs ensued.

We affirm. 'To cut off a prior lien, a purchaser "must have not knowledge of the outstanding lien and win the race to the recording office"' . . . The intended purchaser is 'presumed to have investigated the title, and to have examined every deed or instrument properly recorded, and to have known every fact disclosed or to which an inquiry suggested by the record would have let' . . . 'If the purchaser fails to use due diligence in examining the title, he or she is chargeable, as a matter of law, with notice of the facts which a proper inquiry would have disclosed' . . .

Here, the record reflects that plaintiffs did not commission a survey or appraisal of the property prior to purchase, nor did they speak with any of the neighboring property owners or undertake any detailed inspection of the parcel. And, most significantly, the record makes clear that plaintiffs did not conduct a title search prior to purchase. As plaintiff Phyllis Tibby acknowledged at her examination before trial, 'we made no investigations at all prior to purchase,' instead relying upon a procedure that plaintiffs previously employed when purchasing real estate - 'a handshake and . . . you trust that you got the right papers.' Such facts, coupled with the language of the very deed they received for the property, which purported to convey, among other things, all right, title and interest in the two-acre parcel previously conveyed to the McShanes, were more than sufficient to find that plaintiffs failed to exercise due diligence in the conduct of this transaction. Had plaintiffs performed a title search prior to purchase, they would have discovered that which was revealed when the title search finally was performed - namely, the existence of the Department's lien against the property. Accordingly, Supreme Court properly concluded that plaintiffs were not bona fide purchasers for value . . ."

~ DEED REFORMED DUE TO MUTUAL MISTAKE OF THE PARTIES ~

In a recent decision, Miller v. Seibt (Appellate Division, Second Department, decided December 20, 2004), the appellate court upheld a lower court decision which reformed two deeds to include both an easement and the right to use and occupy a building on adjacent lands with the following decision:

"In an action, inter alia, to recover damages for trespass, to direct the defendants to cease and desist from using an easement for any purpose other than ingress and egress, and to recover possession of a barn adjacent to the subject property, the plaintiff appeals from an order of the Supreme Court, Suffolk County (Klein, J.), dated December 1, 2003, which, among other things, denied his motion to permanently enjoin the defendants, inter alia, from parking in the easement area and granted the cross motion of the defendant R. Stephen Seibt to vacate a temporary restraining order granted by the same court (Whelan, J.), on February 11, 2003, temporarily enjoining the defendants from parking in the easement area and determined that the defendants had a right to the easement, including parking in the disputed area, and that the 99-year agreement to use and occupy the barn adjacent to the subject property was valid, and reformed the subject deeds accordingly. . .

DECISION & ORDER

ORDERED that the order is affirmed, with costs.

To reform a written instrument based upon mutual mistake, the proponent of reformation must show, by clear and convincing evidence, not merely that a mistake exists, but exactly what the parties agreed upon . . .

Contrary to the plaintiff's contention, the Supreme Court properly reformed the August 19, 1983, and August 14, 1992, deeds to reflect that the defendant R. Stephen Seibt's non-exclusive easement for ingress and egress included the right to park in the easement area. The record demonstrated by clear and convincing evidence that such was the intent of Seibt and the grantors of the easement and that the omission of that right in the subject deeds was due to a 'mistake of the scrivener' . . . In addition, Seibt's use of the easement for that purpose for more than the 10-year prescriptive period also created a prescriptive easement . . .

Moreover, the Supreme Court correctly determined that Seibt's 99-year agreement to use and occupy the barn adjacent to the subject property was valid since it constituted an irrevocable license based upon his expenditure of substantial funds to renovate the structure, and the fact that he changed his position in reliance on the agreement ...

Therefore, the Supreme Court properly denied the plaintiff's motion and granted Seibt's cross motion.

The plaintiff's remaining contentions are without merit."


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