THEODORE VERDONE JR REVOCABLE TRUST AGREEMENT v. CURTIN (2022)

The Court received and considered the following papers on Respondents’ motion to dismiss the petition herein for lack of jurisdiction pursuant documentary evidence [CPLR §§ 3211(a)(1), (2)]:

1. Respondents’ Notice of Motion, Curtin Affidavit in Support with Exhibits A through C and Memorandum of Law;

2. Petitioner's Affirmation in Opposition with Exhibits A through E;

3. Respondents’ Reply Affirmation

In this summary proceeding for eviction, the Petitioner alleges that the Respondents are holdover tenants following a recently terminated month-to-month tenancy.

In response, the Respondents filed the instant motion to dismiss, arguing that this Court lacks jurisdiction because the Respondents hold equitable title to the property after having entered an installment contract to purchase the property from the owner in 2012 and/or legal title to the property after having received a deed to the real property from the owner in 2019. In other words, the Respondents argued that they are not tenants but, instead, equitable vendees in possession, if not outright owners of the real property. In support of these arguments, the Respondents produced copies of (1) their installment purchase agreement for the property dated October 21, 2012 and (2) their deed to the property dated June 5, 2019, which were both fully executed by all parties.

Generally, entering a purchase contract merges the landlord-tenant relationship into that of a vendor-vendee in possession, thus barring the commencement of a summary proceeding against the vendee, who is now an equitable owner and no longer a “tenant” by operation of law. (Lind v. Lind, 203 AD2d 696, 698 [3d Dept. 1994]; Osborne v. Moutafis, 7 Misc 3d 32, 33 [App. Term, 9th & 10th Jud. Dist., 2005]; see also RPAPL § 711). The parties may avoid this merger by operation of law through an express declaration in their purchase contract stating that the landlord-tenant relationship shall be preserved and not be merged. (Lind, 203 AD2d at 698).

Here, there is no language in the purchase contract that preserves the landlord-tenant relationship following the contract's execution. As a result, Respondents held the status of vendee-in-possession/equitable owner since the execution of the purchase contract in 2012. Under such circumstances, the summary proceeding for alleged tenant holdover must be dismissed for lack of jurisdiction. (See, e.g., Arroyo v. Dipasquale, 31 Misc 3d 1224[A] [Just. Ct. 2011]).

In opposition to the motion, Petitioner argued that the Respondents should be estopped from claiming equitable ownership of the property since Respondents have held themselves out to be Section 8 “tenants” to the federal government following the execution of the purchase contract. Petitioner, however, failed to provide any legal authority to support such an estoppel argument. Furthermore, Petitioner failed to present any legal authority to suggest that such representations to the government could create a landlord-tenant relationship that would override the legal effect of the parties’ installment purchase agreement and/or deed.

Petitioner additionally argued that the Respondents failed to record the deed or that it was rejected for recording; however, recording a deed is not required to transfer title to real property and failure to record a deed does not overcome the presumption of the deed's delivery to the transferee. (In re Humann, 136 AD3d 1036 [2d Dept. 2016]).

Next, Petitioner argued that the Respondents had only purchased a “beneficial interest” in the Petitioner/Trust (that had owned the real property) and not the real property itself. Significantly, however, Petitioner failed to cite any legal authority in support of its argument. In any event, there was no language in the purchase contract or in the deed to suggest that the Respondents were purchasing or had purchased anything other than the real property itself.

Lastly, Petitioner argued that it returned the down payment contained in the purchase contract (seven years after entering the purchase contract and three months after transferring the property by deed) and, thus, rescinded the purchase contract; however, there are several deficiencies with this argument. First, the amount of the down payment specified in the purchase contract and the amount allegedly returned to the purchasers/Respondents did not match. Second, Petitioner offered no proof to establish that either (1) the returned funds were accepted by the Respondents whatsoever or (2) that the Respondents agreed to rescind the purchase contract or re-convey the property to the Petitioner in exchange for such funds. Third, the facts in support of this argument were improperly and insufficiently offered solely through the affirmation of Petitioner's attorney, who had no personal knowledge of the underlying facts. (See, e.g., Barbieri v. D'Angelo, 128 AD2d 661, 661 [2d Dept. 1987]; Prince v. Accardo, 54 AD3d 837, 838 [2d Dept. 2008]). Fourth, rescission of the purchase contract and/or deed, not having otherwise been established by agreement between the parties, would necessarily require a judicial rescission, which is an equitable claim/remedy that is not available in Justice Court or, alternatively, declaratory judgment/relief, which is exclusively available in Supreme Court. (See, e.g., Habberstad Volkswagen, Inc. v. GC Volkswagen, Inc., 127 AD3d 1019 [2d Dept. 2015] [rescission is an equitable remedy]; Suarez v. El Daro Realty, Inc., 156 AD2d 356, 358 [2d Dept. 1989] [declaratory relief is exclusively available in Supreme Court]; Chapman v. Davis, 75 Misc 3d 360, 372 [Just. Ct. 2022] [Justice Court lacks equitable jurisdiction to fashion equitable remedies]).

Due to the presence of the fully executed purchase contract and/or deed in this case, the Petitioner may not avail itself of a summary proceeding for eviction due to the lack of a landlord-tenant relationship. Instead, the Petitioner is limited to such relief as foreclosure of the Respondents’ equitable title, an action at law for the purchase price, rescission of the purchase contract and/or deed or declaratory judgment/relief, all of which would be exclusively available in Supreme Court. (See, e.g., Arroyo v. Dipasquale, 31 Misc 3d 1224[A] [Just. Ct. 2011]; Hornsby v. Christopherson, 160 Misc 2d 78, 79 [Just. Ct. 1994]).

For these reasons, Respondents’ motion to dismiss the petition herein is granted and said petition is dismissed.

This constitutes the Decision and Order of the Court.

Darren H. Fairlie, J.