Why Oral Property Agreements Can Leave You High and Dry: McLean v. Ryan Analysis

This week we wanted to draw your attention to an interesting decision out of the Appellate Divisions, Third Department, that held, in relevant part, that an oral agreement between neighbors for the continued use and access by the Defendant of a water delivery system designed to primarily benefit the Plaintiff’s property violated the Statute of Frauds and was therefore unenforceable. 
The relevant facts of the attached case are set forth below.

 In McLean v. Ryan, 157 A.D. 2^nd 928 (1990), Plaintiff, Robert S. McLean, and Defendant, Claire A. Ryan, were the principal parties in a litigation which, in part, revolved around the Defendant’s ongoing use to a water system that was originally installed to directly benefit Plaintiff’s property in Essex County .  At trial, it was determined that the Plaintiff’s deed contained a Covenant and Restriction to the effect that “[t]he parties hereto further covenant and agree that they, their successors and assigns, shall not modify the existing water lines on the premises hereby conveyed, nor divert or restrict the water supply as it may exist from time to time without the written consent of the owners of the land involved to the south thereof (ie. the Defendant’s property), all as set forth in a prior deed … dated September 20, 1957".   The deed that conveyed title to the Defendant and her husband stated that Defendant's interest is "[subject] to covenants, rights of way, easements and restrictions of record".   The Court noted the significance of the fact that, no allegation is made that the restrictive covenant is not proper in all respects (see, 4A Warren's Weed, New York Real Property, Restrictive Covenants, § 2.01 [4th ed]).
 
At the time Plaintiff acquired the property, the water system consisted of one pipe leading from a shallow well located on Defendant's property to a reservoir located on the Plaintiff’s , and an overflow pipe leading to a reservoir located on defendant's property. The pipe leading to plaintiffs' residence was attached to a "T" connector.   Although the system as it existed at the time of plaintiffs' purchase was modified by an oral agreement in 1977 resulting in the attachment of a line leading from the "T" to defendant's residence,  both the Lower Court and Appellate Court held that “such agreement violates the Statute of Frauds (General Obligations Law § 5-703 [2]) and cannot affect plaintiffs' legal rights under the deed to the water system that existed at the time the property was conveyed to them.”

To view the case, lick the link below~ 
https://mcusercontent.com/684414a9e2c939c9532812949/files/f900f1be-90c2-1741-678e-47739696d43e/McLean_v._Ryan_157_A.D.2d_928.pdf

This decision is an important reminder of the need to document and record written agreements with respect to the conveyance or modification of property rights so as not to violate the Statute of Frauds.