Real Estate Law

DIDN'T SHE RATIFY HUSBAND'S DEAL?

In 1989, Vytautas Vebeliunas (claiming to be the fee owner of the "burdened" property) entered into a 20-year "Lease and Easement Agreement" with Henry and Sandra Knecht, in exchange for a lease to certain real property together with an option to purchase same after 20 years.

After taking title to the property, the new owner (Daniel Lipman) -- with knowledge of the agreement's existence -- accepted rent from a trust ("the Vart Trust") of which Vytautas's wife, Vanda, was the trustee.

Once Lipman discovered that Vytautas had misrepresented his status as "owner," an action was commenced in the Nassau County Supreme Court to declare the 1989 Lease and Easement Agreement "null and void." In response to Lipman's motion for summary judgment -- a disposition on the merits, based solely on the submission of papers, without the need for a formal hearing or trial -- the Vebeliunas's both cross-moved to declare the agreement valid.

While the Supreme Court ruled in Lipman's favor and nullified the agreement, on appeal, the Appellate Division, Second Department, reversed. The AD2 noted that while someone other than a fee owner may lack the legal capacity or authority to grant an easement, or other interest in property, that irregularity may be corrected if the true owner "ratifies" the agreement -- accepts its terms and agrees to be bound as if he, she, or it had originally entered into the transaction.

Interestingly, rather than rule in the Vebeliunas's favor, the AD2 concluded there were unresolved issues of fact which required a formal hearing or trial. The AD2 summarized those questions as follows:

Under the circumstances presented here, issues of fact exist as to whether Vanda, as trustee for the Vart Trust, had full knowledge of the material facts relating to the transaction such that she, as trustee for the Vart Trust, ratified the agreement.

But why are there unresolved issues, if Vanda -- as trustee of the Vart Trust -- made payments pursuant to the agreement's terms and affirmatively sought to declare the agreement valid and enforceable?

Vhat are ve missing?

For a copy of the Appellate Division's decision, please use this link: Lipman v. Vebeliunas

From Real Estate Law Blog posted 2007-04-13.