Chapter 33 of the New York City Building Code (“BC”) requires building owners and developers to protect neighboring properties during the course of construction. This can include protection of adjacent roofs and balconies using foam padding and wood decking and protection of walkways using scaffolding or cantilevered netting. If excavation exceeds the depth of a neighboring foundation, underpinning may also be required to avoid subsidence.
While the New York City Building Code requires protections to be installed on neighboring properties, it does not directly authorize these installations. Instead, developers must negotiate written license agreements with neighbors or commence a special proceeding pursuant to New York Real Property Actions Law Sec. 881 to obtain access on such terms as the court deems just, which may include a license fee and reimbursement of neighbor’s professional expenses. To construct a new building or addition near a property line, developers will need access to adjacent properties to install temporary protections, monitor cracks and vibrations, and to conduct pre-construction survey.
I. Negotiate a License Agreement with the Neighbor
Developers should first seek consent directly from the neighbor, through a license agreement in which parties negotiate the scope and terms of access. There are no required formalities or provisions in a license agreement, but a typical license agreement contains clauses concerning indemnification, insurance, and repair of damages. It can take approximately six months to obtain access from the court if it cannot be negotiated voluntarily. Thus, it is important to begin negotiations at least six months before access will be needed to avoid lost rent and interest expenses. If a developer fails to secure access before it is needed, unscrupulous neighbors and their attorneys will often take advantage by demanding license fees or legal fees well beyond what a court would order if access were not needed urgently.
It is noteworthy that a license agreement is different from an easement. A license agreement does not create a burden on or run with the land. Wash-O-Matic Laundry Co. v 621 Lefferts Ave. Corp., 82 N.Y.S.2d 572 (Sup Ct, Kings County 1948). It confers only the right to go onto or perform an act on the land of the licensor without passing a permanent interest in the adjoining property. Otis Marshall Farms, Inc. v. Snyder Const. Co., Inc., 735 N.Y.S.2d 374 (Sup Ct, Madison County 2001).
II. Seek a License from the Court
When neighbors refuse to negotiate or demand excessive compensation or unreasonable terms, developers can and should seek a license from the Court by commencing a special proceeding pursuant to Section 881 of New York's Real Property Actions and Proceedings Law (“RPAPL”). Commencing such a proceeding does not foreclose the possibility of further negotiations toward a license agreement. To the contrary, it can provide an impetus for neighbors to be more reasonable in their demands, and frequently leads to a negotiated agreement.
“By some measures, real estate drives New York City. And whether one favors ‘progress’ or ‘preservation,’ New York State has, in RPAPL § 881, provided a means to facilitate construction.” Matter of West of Seventh L.P. v 382 8th Ave. Realty Corp., 2016 NY Slip Op 31611(U) (Sup Ct, NY County 2016, Engoron, J.) Whether neighbors approve of the development or not, they ultimately cannot prevent the court from ordering access so it can proceed. Where the access is limited to protections required by New York City Building Code Chapter 33, the court’s inquiry focuses not on whether or not a license should be granted, but upon what terms and conditions are reasonable. Relevant issues can include duration of access, insurance requirements, license fees, and reimbursement of legal and engineering fees.
RPAPL § 881 provides that:
When an owner or lessee seeks to make improvements or repairs to real property so situated that such improvements or repairs cannot be made by the owner or lessee without entering the premises of an adjoining owner or his lessee, and permission so to enter has been refused, the owner or lessee seeking to make such improvements or repairs may commence a special proceeding for a license so to enter pursuant to article four of the civil practice law and rules. The petition and affidavits, if any, shall state the facts making such entry necessary and the date or dates on which entry is sought. Such license shall be granted by the court in an appropriate case upon such terms as justice requires. The licensee shall be liable to the adjoining owner or his lessee for actual damages occurring as a result of the entry. (emphasis added)
A. Commencing a RPAPL 881 Special Proceeding
Unlike a plenary action, which is commenced by filing of a Summons and Complaint and can involve years of discovery and motions before a trial, a special proceeding is commenced by a Petition, accompanied by either a Notice of Petition or Order to Show Cause. CPLR §403. The Petitioner may set the hearing date in the Petition, though in practice, it is typically adjourned at least once by the court or the parties.
Petitioners should allege in the Petition that license agreement was sought but denied by the neighbor, and submit a site safety plan and drawings, proof of insurance, and affidavits of architects, engineers or construction professionals. On the return date of the Petition, the Court may make a summary determination on the pleadings or try the case if there are issues of fact. CPLR §409. The initial hearing date typically focuses on identifying the issues in dispute and steering the parties toward a settlement, with one or more subsequent hearing dates being scheduled to resolve factual or legal issues if the parties cannot reach an agreement. An RPAPL 881 special proceeding usually takes about six months to complete depending on the Court’s calendar. A typical license Order provides rulings on license term, license fee, indemnification, insurance and repair of damages.
B. Standard of Reasonableness
In analyzing petitions pursuant to RPAPL 881, Courts generally apply a standard of reasonableness and are required to balance the interests of the parties. Courts should issue a license when necessary, under reasonable conditions, and where the inconvenience to the adjacent property owner is relatively slight compared to the hardship of his neighbor if the license is refused. Board of Managers of Artisan Lofts Condominiums v. Moskowitz, 114 A.D.3d 491 (1st Dept., 2014). The courts recognize the rights of property owners to develop their properties and focus on mitigating any resulting inconvenience to the neighbors.
C. Only Temporary Access Can be Granted
A Court awarding relief under RPAPL §881 has the power to grant licenses for temporary access only, and cannot permit a permanent trespass or easement. Petitions seeking permission to underpin a neighboring property will be denied because the underpinning constitutes a permanent encroachment and there are alternative methods of construction that the petitioner may utilize in constructing its property. Matter of Broadway Enterprises v Lum, 16 A.D.3d 413 (2nd Dept., 2005). Developers must negotiate directly with neighbors if they wish to underpin their property.
D. License Fees
“When a property owner is granted statutory license to enter adjoining property under RPAPL 881, determination of whether to award a license fee to adjoining property owner is discretionary, but the grant of license often warrants the award of a license fees because the adjoining owner has not sought out the intrusion and does not derive any benefit from it and equity requires that the owner compelled to grant access should not have to bear any costs resulting from the access.” Van Dorn Holdings, LLC v 152 W. 58th Owners Corp., 149 A.D.3d 518 (1st Dept., 2017). While the courts have not set a clear formula for determining license fees, they typically range from nothing to five thousand dollars per month, and are set in an amount intended to offset any inconvenience or loss of use value.
E. Reimbursement of Professional Fees
The determination of whether to award licensors professional fees, such as engineer fees and attorneys’ fees incurred as a result of the license, is within the Court’s discretion. RPAPL 881 authorizes the court to grant the license on such terms as justice requires. This language is broad and allows for the flexibility and full scope upon which equity depends. Courts will tyically grant legal fees to licensors’ attorneys, but they sometimes refuse to do so where those fees resulted from the unreasonableness of the licensors or their attorneys.
In terms of attorneys’ fees, “in deciding whether justice requires attorneys' fees, either for negotiating an agreement or in opposing a petition pursuant to RPAPL 881, the court must balance the equities. The Court should consider the extent to which the access sought interferes with the owners use and enjoyment of the property, the risks it poses to the property, as well as the complexities which the access sought presents in drafting a license agreement. Also, any attorneys' fees included as a condition of a license should be proportional to the size and scope of the project.” Matter of North 7-8 Investors, LLC v Newgarden, 982 N.Y.S.2d 704, 712 (Sup Ct, Kings County 2014).
As to architects’ and engineer’s fees, in 2225 46th Street, LLC. v. Giannoula Hahralampopoulos, 46 N.Y.S.3d 772 (Sup Ct, Queens County 2017), the Court denied licensor’s request for professional fees because “adjoining property owners had not hired any architect or engineer, and hiring architect or engineer was unnecessary, in that owner sought to erect fence on their properties that only involved placement of support posts, not any type of underpinning or other prospectively dangerous activity.” Engineering fees may be reimbursed when there are bona fide structural concerns, but they will not be reimbursed when incurred unnecessarily.
Conclusion
While commencing a RPAPL 881 special proceeding can be time-consuming and involves attorneys’ fees, it is typically necessary to secure required access to adjoining properties. The New York City Department of Buildings typically will not allow work to proceeding with written license agreements with neighbors or a court order authorizing access. This is particularly true when a neighbor is less than cooperative and unwilling to engage in good faith negotiation. Litigation often motivates neighbors to settle. While licenses can be negotiated with most neighbors without the need for a special proceeding, many neighbors are unreasonable, uncooperative or unresponsive. In such cases, a license agreement is often reached only once a special proceeding is pending and a grant of access cannot be avoided.
About Author
Sophie Wang graduated from the University of California, Berkeley School of Law in 2013, where she served as an editor of the Berkeley Business Law Journal. Read more.
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