How Much Should You Pay for a Real Property and Proceedings Law License?
A real estate developer purchases an underutilized lot and seeks to either extend the existing structure or demolish it and build a new structure to maximize its square footage. To do this, architects and engineers are engaged and building plans are prepared. The building department reviews the plans and approves them, but before the developer can commence the project, there exists another party that must be consulted.
This other party is the neighboring owner, and they must be consulted because the developer, in maximizing the amount of square footage of his additions, has probably brought his proposed development right up to the property line. In doing so, the project has provoked the application of the NYC Building Code, specifically Chapter 33, which requires the developer to install safeguards onto the neighboring property to protect it from falling debris, among other things.
So, the developer, in order to comply with the law, must access the property of its neighbor to install and maintain certain protections, for example, a sidewalk shed, foam padding for the roof, or cantilevered scaffolding in the air space above the neighboring property.
The developer cannot trespass upon the neighboring property without the neighbor’s consent, so the developer requests from the neighbor a temporary license to do so. In exchange for this license, the neighbor demands money, like $50,000 upfront. Is that a reasonable demand? How much, if anything, should the developer pay for such a license?
The laws of New York provide a general answer to such a question. The practicalities of real estate development and the court system caution a wise developer to take into consideration further contingencies.
To start with the law. In conjunction with the New York City Building Code, which may require developers to trespass onto neighboring properties to provide protection, the New York Real Property and Proceedings Law (“RPAPL”) provides developers the power to petition the courts, in the event the neighbor withholds consent, for a court ordered license agreement to provide such protection. Such a petition is brought pursuant to RPAPL 881, which provides, that “such license shall be granted by the court in an appropriate case upon such terms as justice requires.”
Those phrases, “such license shall be granted” and “upon such terms as justice requires” essentially mean that the judge hearing the petition must grant a license but will have a lot of discretion in deciding what the terms are for that license. Such discretion makes the judge’s ultimate decision inherently hard to predict. Still, previous decisions by judges provide a baseline for what to expect.
At a minimum a developer should expect to be required to install and maintain protections pursuant to a site safety plan, to provide insurance coverage, to indemnify and hold harmless the neighbor for any losses and/or lawsuits resulting from the project, to make repairs for any damages caused by the project, and to reimburse any professional fees (i.e. engineering fees, attorneys fees) incurred by the neighbor as a result of the project.
A Court may also direct the developer to conduct a preconstruction survey, install monitoring equipment, and/or post a bond or place funds in escrow for the purpose of compensating the neighbor for prospective losses.
How much though for that license fee? In 2019, the New York State Appellate Court, 1st Department, upheld a lower court’s ruling that imposed a license fee of $2,000 per month for temporary protections upon a neighbor’s rear yard [Footnote 1]. In 2022, the New York State Appellate Court 1st Department upheld a trial court’s ruling that imposed a license fee of $3,000 per month for overhead and roof protections, flashing, an outrigger and netting system, and swing scaffolding [Footnote 2]. In 2021, the New York State Appellate Court, 2nd Department, upheld a trial court’s ruling that imposed a license fee of $500/month for rear yard access and $1,000/month for front yard access. [Footnote 3]. Other notable decisions from the lower courts in recent history include a $1,500/month fee for a sidewalk shed in the front of a property [Footnote 4], a $2,500/month fee for sidewalk bridging in front of a property [Footnote 5], a $1,000 fee for 15 days for scaffolding [Footnote 6], a $4,000/month fee for roof protection, mechanical equipment protection, and netting [Footnote 7], and a $3,500/month fee for cantilevered balcony above the neighboring property’s roof deck. [Footnote 8].
So, the above demand for $50,000 upfront would appear to be very unreasonable. But your analysis shouldn’t end there. You should also consider how much time it would take you to obtain that Court ordered license agreement with the low monthly fee. Assuming that your experienced attorney can prepare such a petition within a week (we can), the earliest return date that can be set will be at least sixteen days in the future.
However, what will very likely happen upon the filing of such a petition is that the trial court will administratively adjourn the return date. How much of an adjournment depends entirely on the judge that will be randomly assigned, but you should expect the adjournment to be at least a month, maybe as much as three months. Then your neighbor upon appearing in this action may apply for another adjournment on the already adjourned return date.
Judges routinely grant adjournments at least the first time they are requested. So in all likelihood, the return date has been adjourned a few times, but you are finally in front of the judge several months later. The judge could decide the matter on the spot. Or he could take the matter upon submission and decide it within a week or several months later. In all, it is not uncommon from the filing of the petition to the grant of the license, that at least six months have passed.
What is happening with your project during this time? If the plans require you to protect the neighboring property to perform further work, and you don’t have access, the DOB can stop your project. Indeed, perhaps the reason why your neighbor made such an unreasonable demand in the first place is that they know that you will lose more, maybe much more, than $50,000 if your project is stalled for six months.
The solution to this predicament is to not be put in an unenviable position in the first place. Reach out to the neighbor as soon as possible. Explore whether they are reasonable or not. If reasonable, employ your experienced attorney to negotiate favorable terms.
If not, employ your attorney to commence a special proceeding, and then, while you wait all those months for justice, employ your attorney to continue to negotiate for favorable terms. An experienced attorney knows how to make a persuasive case for justice in court while keeping an eye on the bottom line in negotiations. Such a strategy can be a fine line to tread but to paraphrase the late great Justice Cardozo: The timorous may move to the suburbs.[Footnote 9]
- House 93, LLC v. Lipton, 178 AD.3d 545 (1st Dept. 2019)
- Panasia Estate, Inc. v. 29 W. 19 Condo. 2022 N.Y. Slip Op. 975 (N.Y. Sup. Ct. 2022)
- Queens Theater Owner, LLC v. WR Universal, LLC, 139 N.Y.S.3d 844, 845 (N.Y. App. Div. 2021)
- Ponito Residence LLC v. 12th Street Apartment Corp., 38 Misc. 3d 604 (NY County Sup. Ct. 2012)
- Matter of Rosma Development LLC v. South, 5 Misc. 3d 1014(A), (Kings Cnty. Sup. Ct. 2004)
- MK Realty Holding LLC v. Schneider, 39 Misc.3d 1209(A) (Queens Cnty Sup. Ct. 2013)
- Matter of Trinity NYC Hotel, LLC v. 11 Rector St., L.L.C. 2018 N.Y. Slip Op. 33630 (NY Cnty. Sup. Ct. 2018)
- Matter of North 7-8 Invs., LLC v. Newgarden, 43 Misc. 3d 623 (Kings Cnty. Sup. Ct. 2014)
- Murphy v. Steeplechase Amusement Co. 250 N.Y. 479 (1929).