The boom in New York City construction continues for the fifth straight year with few signs that the pace will slow in the immediate future. In fact, according to the New York Building Congress, a total of $177 billion has been spent in construction during the past three years, with a forecast for $61 billion of spending in 2018, a nearly 30 percent increase over 2017 and the highest level of spending ever in the city’s history.
The spike in new construction — as well as an increase in building repositionings, normal building repairs, Local Law 11 inspections and resulting façade repairs — have created a significant number of requests for access to roofs, terraces or setbacks on adjoining properties to complete necessary work. Not surprisingly, owners of adjoining properties are often concerned with, or hostile to, such access requests and sometimes seek to deny access based on concerns over potential damage, liability and cost.
To expedite necessary construction, repair and improvements, New York State’s RPAPL § 881 provides that a license to access adjoining property “shall be granted by the court in an appropriate case upon such terms as justice requires.” When access issues are disputed, it is within the court’s discretion to issue an access license after balancing the needs of the owner performing work and the challenges this causes for the residents and/or owner of an adjoining property.
While court-ordered license agreements are often required to advance a project, the existence of the statute usually prompt parties to negotiate a voluntary license access agreement. The owner of an adjoining property has multiple concerns when negotiating such a license. Foremost among them: protecting the property and its residents, and reimbursement of any related expense.
Items typically requested by an adjoining property owner in connection with the negotiation of a license agreement include:
Construction plans, or details and schedule of work to be performed;
Pre- and post-project property condition surveys (photo report).
Pre-construction inspections and ongoing monitoring for construction damage and disruption.
Installation of monitors to track vibrations during construction. As part of construction and repair projects, vibration monitors that track vibrations caused by construction work are often installed at adjoining properties. The license agreement will dictate the timing and location of the installation of violation monitors and the parties who receive these reports in real time. Property owners’ consultants review the monitoring reports for excessive levels of vibration, and readings of excessive vibrations could trigger additional investigations and/or protective measures.
Reimbursement for all professional fees incurred in connection with the negotiation, monitoring and enforcement of the terms of the license agreement. Universally, the costs for adjoining owner are reimbursed by the project owner, including the fees consultants, architects, engineers, attorneys, employees, managing agents.
Insurance (commensurate to the scope of work) in the event of damages, and possible escrow account to cover any damages. In some cases, an escrow account may be funded to ensure that there are immediate funds to respond to any damage to a property and to provide a pool of money in the event that there is a delay in the process of an insurance claim or if coverage is denied. Escrows can be held either by the project owner’s attorney or by the impacted owner’s attorney as determined by negotiation.
Site security for sidewalk sheds to prevent unlawful access. A license agreement may also dictate security measures to be employed in order mitigate security hazards presented by the installation of scaffolding and sidewalk bridges. Scaffolds and sidewalk bridges can provide access opportunities for those seeking to enter a building. These security measures may include special lighting, installation of alarms, and, in some cases, actual onsite security personnel.
License fees (compensation) for the access to adjoining building and the inconvenience of the building residents. To conduct repair or construction work an owner’s contractors may require staging and work areas for significant periods of time on a neighbor’s roof or setbacks. The courts have ruled that an adjoining property may charge a license fee for use of this space. These fees must be normal and customary, and typically range from $1,000 to $5,000 per month depending on the nature of the intrusion presented. Additional payments to individuals who are uniquely impacted by an access demand — such as an apartment owner or tenant who may lose access to a balcony, terrace, roof deck or yard — may be entitled to compensation either in lieu of, or in addition to, the fees due to the property owner.
Penalty if work lasts longer than stated in schedule; Absolute “drop dead” dates for removal of all equipment and property protection.
Indemnification for adjoining property and all agents/officers. License agreements provide for indemnification obligations for project owners to protect adjoining owners from any costs or claims relating to the project owner’s construction and/or access onto the adjoining owner’s property, including physical damage, liability claims, mechanics liens or other costs relating to the access request.
Agreement to repair any damages caused by a property owner’s work during the project.
Penalties for noncompliance with the license.
Due to the requirements of New York law and the realities presented by the fact that properties are built in such close proximity to one another in New York City, the need for well thought-out license agreements is the rule (and not the exception) in connection with New York City Real Estate ownership.