Covenants and Commoition for a Greenwich Village Landmark

This week, the New York Times's Real Estate section profiled the story of the vastly underutilized Northern Dispensary building at Christopher Street and Waverly Place in the heart of Greenwich Village. The Northern Dispensary, which was originally built to provide medical services to Manhattan in 1831(Edgar Allan Poe was a patient) and later became a dental clinic embroiled in controversy for refusing to treat an AIDS patient  in the 1980s, was purchased from the Archdiocese of New York by the late eccentric investor William Gottlieb. The Times reports that much of the difficulty developers will face in finding a buyer for the property- which is surrounded by bustling shops, trendy eateries, and graceful brownstones- stems from the building's strict deed restrictions that prohibit "any obscene performances on the premises or any obscene or pornographic purposes." Restrictions require that the property be used to serve the poor, cannot be used for commercial purposes, and that no abortions can take place on the premises. However, many of the "obscene" and "pornographic" prohibitions are vaguely defined or not elaborated at all.

Image Credit: NY Press 

What is a developer to do? By all accounts this attractive slice of Village real estate (and history) should be fetching top dollar, but the onerous nature of the restrictions leave the empty building's future unclear and the property nearly inalienable. The only hope for those looking to free the property from the restrictive covenant would be to have the restrictions lifted because the covenant violates public policy interests with its wide scope and open-ended duration. See, e.g., Davidson Bros., Inc. v. D. Katz & Sons, Inc., 643 A.2d 642 (N.J. Super. 1994) (holding covenant prohibiting building being used as discount grocery store in an area with high concentration of elderly and low-income residents to be invalid for policy reasons). However, unlike in the Katz case, it would be a much more difficult argument to assert that the Dispensary should be allowed to be developed into luxury condos or a commercial building to meet the demands of well-heeled neighbors or speculators. While a few people would be served by this development, it seems unlikely that such practices would have such widespread benefits to the community to make the appeal able to stand on firm public policy grounds in the effort to terminate, or even modify, the covenants. For now, the Gottlieb Real estate is "examining all options" and the triangular building will sit on Waverly Place waiting, as it has for more than two decades, for its next chapter to begin.