Lance R. Pomerantz
Attorney at Law

Land     Title     Law

“Constructive Notice”  The  Newsletter

Excerpted from the August 29, 2013 mailing of "Constructive Notice":

Rule Against Perpetuities

Supports Foreclosure

Supreme Court, Fulton County [NY], has held that the holder of a contingent remainder interest in property cannot stop foreclosure, even though the interest was not subordinated to the mortgage.

In NBT Bank, N. A. v. Pine Brook Golf Club, Inc., et al, Index #001110/2013 (Sup. Ct., Fulton County, August 27, 2013), there was no dispute concerning the default under the mortgage.  In fact, the mortgagor, Pine Brook Golf Club, Inc., didn’t even defend the foreclosure action. The sticking point was a contingent remainder clause in the 1946 deed to Pine Brook Golf Club. The deed provided that if the premises failed to be used for a period of one year as a private golf course, the property was to be transferred to the City of Gloversville. If the City did not accept the land, then it was to be transferred to NLHA, a local hospital. Neither remainder interest was subordinated to the lien of the mortgage, but the City affirmatively waived its rights during the litigation.

On a motion for summary judgment, the Court determined that the Rule Against Perpetuities rendered NHLA’s future interest void, vesting the fee simple absolute in Pine Brook Golf Club. Prior New York case-law has established that where the parties to a transaction are corporations and no measuring lives are stated in the instrument creating the future interest, the future interest is void if it is capable vesting later than 21 years from the date of creation (i.e. the “lives in being” portion of the common-law RAP is inapplicable). In Pine Brook, the interest was created in 1946, but at the date of creation the contingency had the potential to occur (as it actually did occur) well after the 21 year period. A copy of the decision can be found here.

(Kudos to Constructive Notice subscriber Jennifer Beltrami, Esq. and her team at Fidelity National Law Group on their impressive win.) 


New York’s statutory Rule Against Perpetuities was significantly overhauled in 1958. Estates, Powers and Trusts Law §14-1.1 makes application of the current rule prospective only (see Incorporated Village of Mastic Beach v. Mastic Beach Property Owners Association, Inc., 2013 NY Slip Op 50106(U) (Sup. Ct., Suffolk Cty. Jan. 9, 2013)). Obviously, the interest at issue in Pine Brook was created when the earlier version was still in effect. The Supreme Court decision does not directly address this concern. Constructive Notice will continue to track this case in the event of an appeal.