In New York, RPAPL §881 offers a streamlined process for property owners and developers to obtain court-ordered temporary licenses when planning improvements or repairs on their property requires access to an adjoining owner’s premises. This article delves into the key aspects of negotiating and drafting license agreements under RPAPL §881, providing valuable insights for attorneys and developer clients.
The Purpose of RPAPL §881
RPAPL §881, grounded in equitable principles, empowers the court to grant licenses to property owners seeking access to neighboring premises. To secure an order, the applicant (the potential licensee) must demonstrate that entry into the adjoining property is necessary for the planned improvements or repairs. However, the statute also holds the licensee responsible for any actual damages resulting from the entry.
Increasing Importance of RPAPL §881
While previously considered an underutilized law, RPAPL §881 is now crucial reading for attorneys representing developers in New York City. It is also vital for attorneys advising clients whose properties abut sites slated for demolition and new construction.
Confirming Necessity and Required Protections: The Developer’s Perspective
Before resorting to court intervention, developers should take proactive measures to secure a license agreement. Transparency and thorough preparation are key to successful negotiations. When requesting a license from the adjoining owner, developers should present a comprehensive package that justifies the scope of work requiring access and outlines the precautions taken to protect the adjoining property.
Key considerations include:
- Full project presentation: Provide detailed construction plans and reports from architects and engineers, clearly illustrating the impact on the adjoining property.
- Protection implementation: Emphasize the planned protections, especially for excavation under existing buildings on the adjoining property.
- Honesty and openness: Be forthcoming about the project’s requirements to foster goodwill and avoid delays.
- Future underpinning plans: Disclose any necessary underpinning as early as possible to ensure it is included in the license agreement.
The Adjoining Owner’s Perspective
Adjoining owners also play a crucial role in the negotiation process. They should engage their own team of architects and engineers to evaluate the proposed construction work and the protections presented by the developer. The adjoining owner’s professionals should assess whether additional safeguards are necessary beyond those proposed by the developer.
Important considerations for adjoining owners include:
- Evaluating proposed protections: Assess the adequacy of the developer’s protection plans and consider if more extensive measures are required.
- FAR and landmark concerns: Evaluate whether the neighboring project’s floor area ratio or landmark status might affect future development plans.
- Comprehensive preparation: Adjoining owners must be ready to present their concerns effectively if negotiations break down and the case proceeds to court.
Key Terms and Conditions of a License Agreement
Whether imposed by the court or negotiated between the parties, license agreements typically include several vital provisions:
- Scope of work: Clearly define the work to be conducted on the licensed premises, often through annexes prepared by the developer’s architects and engineers.
- Licensed premises and schedule: Describe the permitted location, work schedule, and duration of the license term, ensuring minimal disruption for the adjoining owner.
- Protections for licensed premises: Specify the agreed-upon protective measures, considering the complexity of the work and adjoining property concerns.
- Indemnification provisions: Clarify liability for damages to persons or property on the licensed premises resulting from the licensee’s actions.
- Insurance requirements: Outline the insurance coverage the developer must maintain during the project.
- Reimbursement: Address the adjoining owner’s reasonable expenses incurred during the negotiation process, including attorney fees and consultants’ costs.
- License fee: Determine a fair compensation amount to compensate the adjoining owner for the loss of use and enjoyment of their property during the license term.
Determining the License Fee and Other Charges
Determining the license fee can be a contentious issue. While courts often award monthly license fees within a range of $1,500 to $3,500, negotiation between the parties can result in substantially higher fees. In cases where significant damages or intrusion occur, evidence from a real estate broker may be necessary to assess the impact on property value.
Additionally, license agreements may require developers to deposit a security fund into an escrow account. The amount should reflect potential damages caused by the construction work, as determined by the developer’s plans and specifications and approved by the Department of Buildings.
Better to Negotiate Than Litigate
It is crucial to approach RPAPL §881 proceedings as a last resort. Both developers and adjoining owners should aim to negotiate mutually agreeable license terms to avoid court intervention. Resorting to litigation can introduce delays, potentially disrupting construction schedules and affecting financing arrangements. Parties must carefully consider the court’s perspective and the possibility of undesired outcomes.
Negotiating license agreements under RPAPL §881 demands careful consideration of the specific project’s requirements and the adjoining property’s concerns. Thorough preparation, transparency, and open communication are essential to facilitate successful negotiations. By prioritizing a comprehensive license agreement and fair compensation, developers and adjoining owners can achieve their respective goals amicably and efficiently. For comprehensive legal advice and assistance with RPAPL §881 proceedings, contact Garrity Traina.