Construction License Agreements and RPAPL § 881 Litigation

Construction License Agreements

As we all know, building in a place like New York City is complicated and expensive.  The space constrictions present an added challenge – the necessity of gaining access to neighboring properties to facilitate construction or protect the neighboring property during the construction process.

There are a variety of reasons why a neighboring building or construction company may need to access neighboring properties during a project.  For example, they may need to install scaffolding or other equipment, or they may need to temporarily store materials or equipment on the neighboring property.

Of critical importance, the New York City Building Code requires building owners to protect adjacent properties and pedestrians during the course of construction, excavation, demolition and various other activities that could pose a risk of harm to the neighboring properties, its occupants or nearby pedestrians.  As a result, developers must often gain entry to neighboring properties to install protective measures ranging from foam or plywood roof protection, vibration monitoring, scaffolding, sidewalk sheds, netting or even underpinning to provide structural support to a neighboring building in connection with excavation.

An access agreement, or construction license agreement, is a legal contract between the owners of two or more adjoining properties that governs the terms for such access.

Some of the key issues that may need to be addressed in an access agreement include:

• Permitted work:  This is, perhaps, the most critical aspect of any construction access agreement.  Will the party entering the property be permitted to install scaffolding?  Window or roof protection?  Underpinning for excavation work?  The nature of the access sought will inform essentially all other terms of the access agreement.
• Scope of access:  The agreement should clearly define the scope of the access being granted, including the specific areas of the neighboring property that will be accessed and the specific purposes for which access is needed.  Restrictions or conditions on access should also be addressed – such as scheduling limitations on the days and times that access will be permitted, and restrictions on noise or the use of heavy machinery.
• Duration of the license:  For how long will access to the property be permitted under the agreement?  Access may only be needed for a very short time or, if the underlying project is substantial (such as the construction of a high-rise building), access may be required for months or years.
• Compensation:  The agreement should address whether compensation will be paid to the property owner granting access, including license fees and reimbursement any damages that may occur during the construction process. This may include compensation for damage to property, loss of use, or other related expenses.
• Professional fees:  The agreement should specify whether the developer will reimburse the adjacent property owner for some or all of the professional fees incurred in connection with the license, such as fees paid to attorneys, structural engineers or architects.
• Insurance:  The agreement should require the construction company to maintain appropriate insurance coverage to protect against any damages or injuries that may occur during the construction process.

• Indemnification: The agreement should include provisions for indemnification, which means that the construction company will be responsible for any damages or injuries that occur as a result of their actions during the construction process.
• Termination:  The agreement should include provisions for termination, which may be necessary if the construction project is delayed or cancelled for any reason.

Judicial Licenses Pursuant to RPAPL § 881

If an agreement cannot be reached—perhaps because the neighboring property owner refuses to negotiate, or demands onerous terms for access—a developer can seek a judicial license pursuant to Section 881 of the New York Real Property Actions and Proceedings Law (“RPAPL”).

RPAPL § 881 provides that, where permission to enter the adjoining property has been “refused,” the party seeking access may file a petition asking the court to grant the access, and that access “shall be granted by the court in an appropriate case upon such terms as justice requires.”  Generally speaking, this means that the court will grant the license if it is satisfied that access is required but has been refused, and will order reasonable conditions to govern such access.

A petition under § 881 is a “special proceeding” which is generally adjudicated in a much more expedited fashion than a typical litigation commenced by Summons and Complaint.  A petition filed under RPAPL § 881 petition should include the following:

• A description of the property that is being accessed and the purpose of the access.
• A statement explaining why the access is necessary, that the adjacent property owner has refused access and, if known, why the other party is unwilling or unable to agree to the access.
• A request for the specific terms and conditions of the access, including the duration of the access, the work sought to be performed or protective measures to be installed, the dates and times during which it is permitted and any restrictions or conditions on the access.
• Proof of insurance.
• An affidavit from the petitioner’s design or construction professional, describing the necessity of the access and the specific, technical parameters of the access required.
• A statement explaining how the requested access will not unreasonably interfere with the other party’s use and enjoyment of their property.
• A description of the terms offered by the petitioner in requesting access from the neighbor, including any license or other fees, and a copy of any proposed access agreement.

The judge assigned to hear the petition will determine whether the access is necessary and, if so, will either impose license terms of the court’s choosing or, very commonly, will attempt to assist the parties in negotiating the terms of access so that the case can be settled voluntarily in a way that fairly addressees the parties’ respective concerns.

In the video below, Bradley Pollina and Cooper Knowlton dive deeper into construction access agreements – explaining the process of entering one of these agreements, the key provisions that they should include and strategies for resolving disputes that may arise when negotiating the terms or attempting to enforce one of these contracts.

If you have any questions about access agreements or RPAPL § 881 litigation, please let us know.  At BFKP, our attorneys can help you negotiate and enforce access agreements, and litigate § 881 petitions, for construction projects in New York City.