Julie Schechter, Partner, Armstrong Teasdale in Legal/Financial
In New York City, building owners tasked with exterior work on their property must put up protections within 20 feet of the building to avoid injuries. This rule is fairly straightforward when the work affects public spaces, but it becomes more complicated when you need to protect the roofs or balconies of neighboring buildings. Section 881 of the Real Property Actions and Proceedings Law allows owners doing mandatory work on their building’s exterior to gain access to a neighbor’s property under what’s called a license or access agreement.
Lack of leverage. The agreement outlines the terms and conditions under which the property owner needing access can enter the neighboring property to install protections. That includes a license fee that the co-op or condo doing the work must pay the neighboring building for the lost use or interference caused by the access. One challenge with access agreements is a lack of standardized guidelines for calculating fees. If your neighbor wants to delay or hinder the work, they may demand exorbitant fees. Property owners facing such demands are left to either pay up or resort to a lengthy and costly lawsuit to get access. The provisions under RPAPL 881 were supposed to be a quick mechanism for a neighbor to gain access via the courts. The problem is, the system is very backed up and it's no longer an emergency proceeding. It can take years and be quite expensive.
Figuring out fees. To determine appropriate fees, one key factor to consider is the extent of the protections required and the type of property access needed. Protections for a usable rooftop space, private terraces or private units, for example, typically demand higher fees. The timing and duration of repairs, as well as the impact of encumbrances on a particular property, also play a role in determining fees. Each situation is different, but the average fee tends to fall between $2,500 and $5,500 per month. License agreements frequently include incentives to encourage timely completion of the work by imposing additional fees if the project exceeds its allocated time. These clauses serve to motivate the building performing work to finish promptly and compensate the encumbered neighbor for extended disruptions.
Reciprocal needs. For owners being asked to grant access, a demand for very high fees can set a bad precedent because someday you are likely going to need access to your neighbor’s property. That’s why it is crucial for boards to play fair. A reciprocal provision within a license agreement — specifying that when the roles are reversed, the terms will be similar, preventing the license fees ballooning from year to year — can often make sense. However, reciprocity isn't guaranteed, especially in cases where there’s a big difference in height between neighboring buildings and the shorter building may never need access to its neighbor’s roof, for example. So while urging reasonableness in negotiations, it's essential to consider the specifics of each situation. Negotiations around access can be complex so it’s important to communicate with neighbors early on in the process, preferably at the point when a contractor is being selected.
Calls for change. Due to the complexities and delays around access provisions, there have been calls for legislative changes. The New York State Senate has passed a bill to amend RPAPL 881, which awaits the governor's signature. Currently, RPAPL 881 primarily deals with temporary access, but the amendment acknowledges that certain projects may require permanent encroachments, such as underpinnings for structural support. However, the proposed amendment does not provide a standardized method for determining license fees. Going forward, a guideline or formula for license fees could help establish a baseline for negotiations.
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