This was originally posted on the SGR Blog.
Did In-Laws Own 25% Interest in the Property?
A man purchases a brownstone in New York City and verbally agrees that his parents would receive an interest in the building and one of the four apartments in exchange for partially funding the purchase. But, as a recent case illustrates, the matter becomes far more complicated when the man and his wife part ways and, in the divorce proceeding, the wife challenges her in-law’s legal claim and equitable lien.
Carol and Bernard Davis sued to quiet title to real property at 106 West 121st in Manhattan. They alleged that, in 2001, Peter Davis, their son, purchased a four-story brownstone in Manhattan that was divided into four apartments. According to his parents, before Davis closed on the property, they entered into a contract with their son pursuant to which they would pay their son $350,000 in exchange for 25% ownership interest in the brownstone and exclusive possession of the ground floor apartment. According to the agreement, Carol and Bernard further alleged, they paid the $350,000 and have remained in exclusive possession of the ground floor. And they sued to amend the deed for the brownstone to correct the mistake that the deed did not reflect their 25% interest in the property.
Complicating matters, in a divorce action, Anastasia Augoustopoulos, who was married to Peter, contested her in-laws’ rights in the property.
Augoustopoulos moved to dismiss the action, arguing that the cause of action seeking to quiet title under RPAPL asserted a breach of contract claim, which was barred by the six-year statute of limitations. She also argued that the pleadings were insufficient to state a statutory quiet title action. The Court dismissed the action. Her in-laws appealed.
The motion court correctly found that the complaint sought to quiet title, which can be brought at any time while the claimant is in possession or within ten years. But the substantive arguments in support of dismissal were unavailing. To maintain a cause of action to quiet title to real property, a plaintiff must allege actual or constructive possession and the existence of a removable cloud on the property, which was an apparent title to the property, such as in a deed or other instrument, that was invalid or inoperative.
Here, the complaint adequately alleged facts that, if established, could support a finding that Carol and Bernard attained equitable title arising from the contract of sale they allegedly entered into with Peter for 25% of the property, as well as their payment of the agreed price and exclusive and actual occupancy of an apartment in the property. The allegations, including that her in-laws did not take actual or constructive possession, were factual arguments that contradicted the pleadings and therefore did not warrant dismissal of the action.