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How are litigators involved in licensing agreements?
AUTHORJoanna Peck, Adam Leitman Bailey
Licensing agreements are a big deal for a lot of co-op and condo boards these days, with Local Law 11 and so much new construction. You're a litigator, so how are you involved with these types of agreements?
First of all, the general counsel is fine with 90 percent of the transactional work that a condo or co-op does. But because of the technical considerations involved in licensing agreements – whether you're looking to get the license from your neighbor doing the construction or negotiating with the developer –you should bring in a litigator at the start so they can set up the agreement in the unfortunate event that it goes south.
Does the litigator help negotiate the fees, insurance, protections for the building and so forth?
They can work in conjunction with the general counsel, but I would strongly advise that the litigator be involved in every aspect of the agreement, since the nuances are very important. Sometimes the negotiating terms just cannot be agreed on, and people dig in their heels, and having the litigator there at the very beginning can help the condo or co-op set up the right team of people so that the unit-owners or shareholders are best positioned if things end up in court.
Okay, so there's the technical stuff that you help negotiate. What specifically does that involve?
I basically carve licensing agreements into two components. The first is the technical items. For example, if somebody is developing next to you and you're negotiating with them, you need to determine what impact construction is going to have on your building. That includes what measures are needed to protect your property from physical damage, what life and safety precautions have to be implemented, and how construction is going to affect shareholders or unit-owners in the building.
And what's the second aspect?
Economic considerations, such as insurance requirements and interference of use and enjoyment. When there are specific residents that are going to be more impacted than others – say, people who have a terrace – there may be special considerations that need to be negotiated on their behalf.
What if you simply can’t come to terms with your neighbor? Do you want to have a litigator involved from the get-go so that you’re ready to go to court?
That’s not the goal. You want a litigator because they’ll have command of all the details, facts and nuances, particularly the technical considerations. They will also have put together a team of architects and engineers – structural and geotechnical – who will help them advocate for their client to get the right protections in place and to argue that before the judge if you do go to court. In the case of a condo or co-op that is doing the development themselves, a litigator can explain why the proposed work is sufficient and compliant with code.
So to sum up, what should a board keep in mind as it embarks on this process of negotiating a licensing agreement?
First off, bring in a litigation attorney to work in tandem with your general counsel or to take the lead. Another subtle aspect here is that having a litigator shows the other side that you really know what you’re doing because they’re the ones who have vetted these issues before the judges. In fact, because licensing agreements are a new area for many judges, litigators are actually educating them.
So the neighbor negotiating the agreement will take it more seriously if there's a litigator at the table.
I certainly would. When I'm working with a client and see one on the other side, I know they mean business.