Eight Feet Jolted a $180M Real Estate Deal | Hacker News Reader

Eight Feet Jolted a $180M Real Estate Deal

nytimes.com

68 pointsjbredeche106 comments

First of all, the headline is pretty clickbaity -- from the article it seems quite clear that this was a case of competing buyers, and the 8-foot setback is some spurious justification for why one of the buyers didn't move fast enough.

Second, many commenters here are arguing that perpetual clauses like this ought to be disallowed. It certainly makes sense to me that clauses like these ought to be converted to regular zoning laws that the city can then adjust as future generations deem necessary.

But third, this particular clause makes sense! You wouldn't want to get rid of it. All the buildings on the block have façades that are aligned with each other, to form a continuous "wall" of buildings. The last thing you want is for some random property owner to get to jut out 8 feet in front of all the other buildings. Ensuring some minimal level of architectural consistency on a dense city block is a good thing.

So keep the eight-foot setback. It makes perfect sense. But just convert it to be a city zoning regulation. It should be decided and modified if necessary via democratic means, not private contract.

> Ensuring some minimal level of architectural consistency on a dense city block is a good thing.

Check zillow. Of the 32 units for rent in Brooklyn Heights, the cheapest is a tiny $2,600/month studio. The median rent is $4,500/month, and that's for an apartment with one bedroom and one bathroom.

No, I don't think allowing a 200 year old private rule to reduce living space in an age of incredible housing scarcity is good. I could not care less about your architectural consistency when it is part of the reason why people are sleeping on the streets and others are paying most of their income on rent.

"sleeping on the streets" and "living in Brooklyn Heights" are hardly the only two options here.

No snowflake in an avalanche ever feels responsible.

There are a lot of bad zoning laws and covenants out there that encourage housing scarcity. This is not one of them.

There's zero chance this particular covenant is reducing living space, instead it's preventing some billionaire from building some obnoxious entrance across the existing sidewalk.

The us is huge

And the market has shown where people would like to live

If by like to you mean are forced to to escape poverty...

Are you claiming that it's impossible to escape poverty by moving to North Dakota and getting a job in the oil & gas industry?

Are you claiming oil patch jobs aren't a rounding error per capita? Lets be clear here, you're for real claiming that a career track that employs fewer people in the continental US than Pizza Hut is relevant to a discussion of rural poverty?

Without sacrificing health working with chemicals

No, people go to where the resources and opportunities are.

Markets are for maximising profits. Housing should not be a market.

Why do you want to limit people’s property rights for looks? Why does a row of buildings need to be exactly aligned? This type of thing and HOAs are a bane upon property owners. I’m glad I don’t have an HOA, and I’ll never understand the push to not allow semi-organically grown cityscapes. You need some zoning limits, but do it Japan style rather than for looks.

Why do you want to limit people’s property rights for looks?

Literally is an overused word, but it fits here:

A covenant is literally a property right!

Covenant is the equivalent of a Eula poisoned into software you've purchased. If you own it you ought have the ability to disable the Eula. A covenant is weird because it more often than not is contract entered unilaterally by some dead guy with himself somehow under the fiction it is an agreement with the land itself, it's not clear who the counterparty even is.

The major problem with EULAs is the power disparity between the buyer and seller. It’s me vs Microsoft and I can’t practically opt out of MS Word. A secondary problem is that no one knows what’s in them because no one reads them.

A real estate deal is nothing like that. The buyer and seller have roughly equal power and everyone is represented by lawyers.

Equal power is if you had any control over the covenant. In most cases, it’s a take it or leave it situation. That’s not equal power, that’s a complete lack of it. I personally don’t see how a covenant on a property is anything other than the attempt to control the living world from the grave, and shouldn’t be allowed. Zoning laws can change with the times, they’re sufficient to protect the property owners from major nuisances.

Zoning laws require an entire legislature to enact or change. A covenant only runs between the parties to the covenant. This is such an absurd point that is repeated here.

Because some of the USA (notably the north east) still gives a shit about the communities where they live rather than embracing rugged frontier individualism a la "trust no one, and get yours first."

Just because you own something doesn't mean you get a free pass to be a nuisance to others. Laws are there to keep society together, not to enable antisocial proclivities.

Check out Japan zoning laws, pal. I’m not some rugged individual, but I still believe in reasonable freedoms. Japan doesn’t have issues with nuisances with their zoning system. Far from it.

That's a cultural artifact. The same as why HOAs proliferated outside the puritan colonies: people could not be trusted to self-govern and self-regulate towards a common good.

Japan doesn't have issues with nuisances because -- culturally -- they're more aware of the effect their actions have on the world around them. The same cannot be said for a large portion of the U.S.A.

I'm of the opinion freedom as a detached goal for its own sake is a puerile pursuit, and a big driver of why we can't have nice things.

Are you sure / do you have specific Japanese knowledge?

My gut assumption, not having Japanese knowledge, was always that the production needs of WWII incentivized their mixed commercial -residential system.

It does seem that a mixed commercial -residential system would work better with a conscientious of neighbors society, but the zoning itself is also key

A very, very right-wing coworker once said to me: "There is no such thing as society. There is no such thing as common good. These are fictions created to control you."

I was happy he had identified our fundamental disagreement so that we didn't have to argue further.

Yes, now throw him out deep into the Mongolian steppes and see how he fares without modern supply chains.

Everyone's a libertarian until you take away the fruits of industry.

Mutual benefit is a thing, industry works fine when everyone is driven by selfishness as no one agrees to a transaction unless both parties are better off.

I'd much sooner live with that coworker in the steppes than cheerman mao or other charlatans in Asian history proclaiming about the common good.

Yeah this is why I bought land with no HOA and no covenants and basically no codes and liberal zoning. Sure the roads are dirt 4x4 and my neighbors have livestock and wild noises at all times but if I wanted to regulate other land I'd buy it myself rather than using violence of enforcers sent in to stop it.

If you want 8 ft setback, simple solution. Build 16 ft from your property line,problem solved even if your neighbor hits the edge.

Adding a covenant to a deed is a property right, I think wanting to know invalidate them is anti-property rights.

My parent's house in the Bay Area came with (Now unenforceable) covenants dictating that PoC cannot live there. The can and should be changed as necessary.

But it is anti property rights to force someone to rent or sell to poc. Of course without government influence this becomes a dumb business plan because it depressed the utility of your property and hands business to competitors.

I would argue government should eliminate racial discrimination laws as it will just shake itself out in the market and it actually makes things harder on poc.

In a world where humans are have rational, then your argument would be correct. Alas that's not the world we live in, as history keeps telling us.

Firstly, let's consider "2 groups". This might be racial, or straight/queer or religion or immigrant status or wealth or whatever. This issue crops up all over history (think Irish immigrants) - society has a habit of splitting into us and them.

Ultimately the split is economic - one group contains much economic power, (which is largely analogous with political power) the other far less. The group with the economic power is seeking to preserve it, the other group is trying to move economically upwards.

So to your first point - exclusivity might depress utility, but it increases value. The free market offers high premiums to exclusivity. So far from being a dumb business plan, it maximized business returns.

Above all, rich people want to live in a bubble of rich people - and zoning laws, the free market, etc (controlled by rich people) work towards this goal.

Then we toss in the notion of "my home is an investment." When you see your home as a store of wealth, then you make communal decisions to preserve that wealth (at all costs.) Will that new bridge, school, office block, anything, make the value of my home go up or down? Pretty much nothing rlse matters.

From this arises push-back laws that try and regulate the worst of these tendencies away. They're almost always fighting the inclinations of the haves to the have-nots. They are often contentious because they go against the natural inclinations of the economically advantaged.

Fundamentally your argument is flawed because those with economic power work hard to keep it. Part of that is actively working against the interests of those without. The market is very much not free.

>I would argue government should eliminate racial discrimination laws as it will just shake itself out in the market and it actually makes things harder on poc.

Yeah, many people did, and then it turned out that it wasn't working!

If the covenant was added by a dead guy and the counterparty doesn't exist but now it's enforced by a government court against the wishes of the property owner who owns the 'right' is it really property rights at that point? I'm willing to be convinced but it's not super clear to me.

It's a property right for whoever would benefit. If no one benefits, then who is enforcing it? The gov't doesn't do so voluntarily, covenants are enforced through the civil court system.

I'd argue this is a bit different than your typical suburban HOA restrictions.

Cities are shared spaces, and design consistency is pleasing to humans. Beautiful architecture and good city planning are obviously subjective, but aesthetically, design consistency creates a sense of harmony, unity, and comfort compared to a disjointed hodgepodge without a cohesive architectural through line. Functionally, it can also promote things like walkability and sustainability, making it a nicer place to live and work and visit.

The 99% Invisible podcast recently had an episode about Sante Fe, NM. The city has strict guidelines for architecture and design which have ultimately been a big factor in the city's success as a tourist destination. https://99percentinvisible.org/episode/roman-mars-describes-...

When I see a city with organic development, I feel cozier than with the cities that all look the same and were built all the same. I think the American idea of “unity” in these matters is a bit insane and very exclusionary.

I wonder if this is a cultural thing imported by the original immigrants to the nation or some other factor. The American desire for uniformity is almost German. There needs to be "consistency" and "unity" in design. This is probably why so many houses are all grey and stuff. I much prefer the organic Asian form of things, and I think the US (which is generally quite awesome) would be well improved with that.

If there's one thing you can say about America, it's that we're nowhere near as independent and individualistic as the rest of the world. New York is tentpole of homogeneity compared to Barcelona or Lyon.

Come to Tokyo if you want to see a city full of radically-different buildings right next to each other.

But ask any normal American, and they'll tell you the city is "ugly" because all the buildings don't look the same.

I meant "unity" the design principle, not the patriotic sense.

Reasonable restrictions and a bit of city planning don't preclude organic development, New York is probably the most organic city in the US. I'm not advocating for every city to be completely uniform and same-y and soulless, just cohesive and thoughtful. Cohesive != uniform.

https://www.invisionapp.com/defined/unity-principle-design

I think we probably agree mostly. I’m also talking about design. I prefer a less constrained design system for a city, I think it gives life. Trying to control every bit of the look of a place makes it boring and conservative, IMO. In the USA, I also think that design unity is used to get rid of undesirable persons, and keep things a certain way for certain types of people.

> All the buildings on the block have façades that are aligned with each other

What's interesting here is that in the picture they provide to document the 8 foot setback, the reason the buildings do not align with each other is because of that. Other buildings on the block go right up to the sidwalk.

Typically, covenants are meant to cover issues more locally than zoning could, like a permanent easement for the benefit of an adjoining property or setbacks for all the properties on one street to achieve a particular aesthetic. You could make them zoning laws, but they would be rather complex and have to refer to particular parcels.

They can be removed, but typically you have to prove that removing the covenant isn't negatively impacting another property owner for which it was originally added. It can be done by unanimous agreement of the property owners, or more commonly, by just buying up all the adjoining properties.

you can also invalidate a convenant through laws.

a good portion of the US has racial covenants saying what properties can be sold to whom, but none of those have been legal or legally enforceable since the Fair Housing Act. https://www.alta.org/advocacy/housing-opportunities/discrimi...

Good point. Another famous example are the "entails" that many inherited estates in Britain had at one time (and a major plot point in the show Downton Abbey).

Doesn't your argument that this should be converting to a zoning regulate kind of negate your point that we should want to ensure some level of consistency on a dense city block?

No, the point is that the zoning maintains the consistency.

But that if someday in the future there's a greater public need for something that outweights the architectural consistency, there's the flexibility to consider that too, through the existing public mechanisms of zoning changes.

Like if the entire block gets purchased and torn down to put in a single school building, then the setback is no longer needed, because a new kind of consistency can take its place.

Personally, I think rent is far too high. We need real change. Perhaps hard-working worker co-ops could build homes designed to a consistent pattern by artists like me for us to live in. Housing is a human right, so the government should build them. It's sheer Mammon-worship if someone were to make a profit so we should ensure that doesn't happen. We could call the project El Sombrito.

Isn't it absurd for a zoning regulation to pertain to only one city block? Isn't that actually the antithesis of the concept of zoning?

So in other words, this feat was a well worthwhile hack

I think a case can be made that covenants like this should be disallowed.

Sure, allow contracts to be signed, where if a condition is violated then a penalty can be paid. But here? There's no one to buy off to relax the constraint. It's held in perpetuity by the dead hand of the past.

To put it another way: there's a property right here (in that setback) that is just sort of floating in the air, not owned by anyone alive. That makes it untaxable, when all sorts of other property is taxable. It should be possible for the city government to condemn that "property" and then change the covenant. They wouldn't even have to pay anyone, since there's no owner.

> But here? There's no one to buy off to relax the constraint. It's held in perpetuity by the dead hand of the past.

I'd agree that there no one specific with whom you could re-negotiate the condition, but that doesn't mean there is "no one". It means that the negotiation must involve everybody who has made decisions based on the presence of the covenant, and who would be negatively impacted by it.

As others have mentioned, there are procedures in place that could strike down a covenant. It isn't the "dead hand of the past" that is being protected. It's the current homes of the living.

I don't think its logistically possible to negotiate with every relevant party in Brooklyn, or even within a half mile radius. It's effectively impossible to change, without resorting to the legislature, if that's a mandatory requirement.

If you live a half mile away are you impact at all by a setback covenant being altered? If you're a neighbor you almost certainly are.

This is a normal street where people walk every day for their commute, of course someone living a half mile away who uses the street can credibly claim to experience some non-zero impact with a narrower sidewalk.

What about some who visits on Google street view?

You probably know more than me about this since I didn't even think of it until now.

> everybody who has made decisions based on the presence of the covenant, and who would be negatively impacted by it.

Including everyone who has sold the property in the past, and/or decided not to buy it.

There is the Rule against Perpetuities, that may apply. But it sounds the rule and its application is very complex in New York, so you'd likely need a lawyer very familiar with the specifics in New York to tell you if it applies to restrictive covenants in real estate deeds. My lay person understanding is the covenants in the 1905 deed were void for my house near San Jose, CA; but those were temperance covenants and didn't affect my daily use anyway.

My understanding of the Rule against perpetuities is that it only applies to inheritance, not general real estate transactions, so covenants can't violate the rule.

(Of course, rule against perpetuities is so difficult to apply correctly that some courts have ruled it's not legal malpractice for a lawyer to screw it up.)

Nope, applies generally to deeds too. [https://en.m.wikipedia.org/wiki/Rule_against_perpetuities]

The rule as I've generally seen stated specifically bans interests from vesting, so even if it does apply to deeds, it wouldn't cover the kind of covenant here I think.

it’s far more than that - read the wiki. avoiding the ‘rule of dead hands’ is a major consideration. such as imposition of unchangeable rules long after death.

The interests vested when the lots were first sold.

I'm happy to be wrong, but this is my understanding...

My restrictive covenant was phrased that if some event occurred, the ownership would convey to the original seller or his heirs.

In that case, the seller's interest would not vest unless that event occurred; and since this vesting could happen in the far future, it's prohibited.

I don't know how the covenant on setbacks is written in this case though, unfortunately the images from the article are too small to be legible, and I don't know where to find them otherwise.

Setbacks are part of the property that is still owned by the school. Schools don't (currently) pay property taxes in New York, but whoever buys the buildings will still owe taxes on the property, including the setback.

One of the potential buyers are trying to stop the sale to a different buyer, so the setback isn't at issue. The most one could say is that the setback diminishes the potential taxable value of the property by not allowing larger buildings, but that's somewhat subjective (does the setback itself make the existing footage more desirable?).

Yes, I understand taxes are still owned on the property itself. But the right embodied in the covenant is another form of property that has been severed from the real property. That right has value (and this value is reflected in the reduced value of the actual property it applies to), but is not now subject to taxation.

It's not severed. Still part of the real property and owned fee simple, but subject to use restrictions.

You did not understand what I wrote. I didn't say the eight foot slice was severed, I said control of the right to build on it was severed. That right is an abstract thing, but it has value, and the value is now not owned by anyone.

Control over the right remains with the covenant. The city could end it if they so choose.

> There's no one to buy off to relax the constraint. It's held in perpetuity by the dead hand of the past.

It's also held indirectly by owners of other properties which sale hinged on that restriction applying to all the properties on the street.

It's this dispersed ownership I'm objecting to. Ultimately it's indistinguishable from being a citizen living in a region. We have a way of representing such collectives: the government of that region. Only here, we have a law that's effectively undemocratic.

Yeah, ideally there would be a HOA-like collective of owners that could change it if they all agreed.

They can change it if they all agree. Just the buyers are complaining that getting them all to agree to that is "very, very hard" to do.

An HOA is essentially just another covenant giving you more flexible rules to change things.

I wonder if you could get them to agree to drop that interest?

There are procedures to strike down covenants, they just involve time and expense. Obviously the expense wasn't deemed worth it.

That's nice. It would be nicer if the time and expensive involved were zero.

Why would "zero" be the ideal price? A price of zero would mean that everybody who wants the covenant to remain in place would need to constantly be on their guard for a hypothetical overly aggressive developer who wants to change it.

Having a non-zero price means that the developer can't just drag out the same argument again and again, trying to overturn the same covenant. Having minimum notice periods and public comment periods means that the developer can't just raise and force the issue in a single meeting over the holidays.

If one holds that such covenants should not exist, then any cost or difficulty to remove them is a negative.

I think people may not know how many things are handled by covenants such as this.

Sure, it's a position that anything like this should be a law on the books, but it's likely a not-very-popular position.

If most people think covenants don't affect many things, then I suspect the position that covenants should be replaced by laws is quite popular. I certainly agree with it - I've never seen a covenant that I felt should exist.

I do not hold that all such covenants should not exist.

That's nice. I was speaking for me, not for you.

Wow, big surprise. Poster who does not even seem to comprehend who actually owns the covenant also thinks that they shouldn't exist at all!

There are actual owners of the property. It's held by each other the other owners of the lots. They could go to their neighbors and buy them off to sign releases of that covenant, just that's hard to get each of them to agree to do.

That was anticlimactic (based on the headline, which is an editor's choice, not the author's). They knew about the requirement and followed it, no jolting involved. The setback is used for a sidewalk. Probably makes more sense for it to be public, but that's not how the man laying out the suburb decided to do it.

To be clear, this is 8’ in addition to the normal public sidewalk/right-of-way. Looking at the photo, the building in question has a wider sidewalk than the buildings on either side.

In this photo, it’s the space to the right of the person in the brown jacket… https://archive.is/uNYgK/bc5622d4591c17c2ac4c1f0ff826d2331ab...

What about the other buildings?

https://archive.is/uNYgK

Not that there shouldn't be such restrictions in some form, but as the article mentions "It’s an agreement that was made in the past.".

Makes you wonder who was involved in that agreement and if it matters now. And I wonder if this applies? https://en.wikipedia.org/wiki/Rule_against_perpetuities

Semi related: Who approved those signs, all caps, that spacing?

https://static01.nyt.com/images/2024/04/19/multimedia/bkheig...

In the UK you can adjust or remove covenants by paying a large fee to the original covenant holder. The legal theory is that the land without the covenant would have been worth more when it was originally sold, so you pay that difference. In this case finding the original covenant holder seems like it would be tricky, but in the UK most covenants were issued by councils [local government] when council-owned housing was sold off, so you'd pay the council to adjust the covenant. Our house has a covenant against keeping farm animals which I've not felt the need to remove.

Not sure why everyone is desperate in these replies to eliminate the setback; seems like a perfectly good outcome to have a wide sidewalk in an area that is likely to have a lot of pedestrian traffic.

I don't fully understand why it's so hard for a legislative body to eliminate such covenants.

Because constituents will often fight such an attempt. For every covenant that's annoying you, there are people in the vicinity that like it.

People generally like setbacks. It prevents their neighbors from being too close, or the street getting crowded in. Property owners might want to develop along the edges, but their neighbors may not want them to.

So clearing these covenants out wholesale is going to be a fight. And going through the legislative process for a single property is really inefficient.

Ah, this answers a question I had: How is a covenant enforced since it's not a law? Who would have standing for a civil suit if a 200 year old covenant was simply ignored?

So what you're saying is that others in the vicinity would be able sue to make sure the covenant was honored? I have to assume this has been tested in court many times before and upheld.

I would imagine neighbors would have standing to sue for since it might affect their view or property values or something of that nature.

Probably, someone who claims to be a pedestrian negatively affected by the lack of sunlight that was previously there.

Every one of the neighbors holding the right under the covenants could sue. They could either seek damages for however much they could show that harms them (good luck, but sometimes more modern covenants will provide a minimum damages amount), or they could seek an equitable remedy and have a court order that anything built past the setback be torn down.

If none of the neighbors care, theoretically you'd be fine to ignore since no one else has standing to sue, but that doesn't preclude the possibility that a neighbor would sell it someday to someone who wants to shake you down. If everyone's fine with it, you really should get them to give up their interests in the covenants.

Legally, it's not hard, you just make a law. You can make an existing type of contract illegal. At that point in time, the contract (or parts of it) become unenforceable. See banning non-competent agreements.

See https://en.wikipedia.org/wiki/Shelley_v._Kraemer where the United States Supreme Court ruled the 14th amendment made "racially restrictive covenants" unenforceable.

Also, depending on the state, you might be able to get a covenant removed by a court if it has been violated for a sufficient period of time.

Basically yeah, it take legislation. Like the Civil rights act immediately struck down all of the racist covenants (that still exist but are unenforceable).

So maybe a municipal action could do something similar?

Of course the easiest way to not deal with covenants like this is don't buy property with them. Condos have tons and I will never live in one.

Gift link: https://www.nytimes.com/interactive/2024/04/19/realestate/st...

Anyone know why the rule against perpetuities wouldn’t apply? Also, is there anyone who could meaningfully enforce this covenant? I appreciate that you wouldn’t necessarily want to risk it anyway, but just to ensure I understand the issue here.

The rule against perpetuities places some limitations on the creation of future interests in land. The kind of covenant in this case doesn't create a future interest.

Presumably someone has a claim for damages if the covenant is violated, in which case they have a future interest in it. If no-one can enforce the covenant, well, it might as well not exist.

Have you bothered to research this at all or are you under the impression that arguing about it on HN will somehow make you right?

One question is: if you build on the easement who is going to sue you? The public? The city? Who's going to bother?

Or is the issue that it'll come up in the title search and you won't be able to get title insurance, which will cause problem with the loan?

In any case deed restrictions get invalidated all the time. The racist ones are null and void, for example.

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