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Good Agreements Make Good Neighbors: The Benefits of Negotiating License Agreements to Access Neighboring Property

 

By David Pfeffer & John Walsh

In New York City, everything comes with a price.  For building owners and collective housing communities, it often comes in the form of the time and expense required to maintain aging buildings in accordance with New York City’s building code and other local regulations, and performing this maintenance often requires access onto neighboring properties.

DAVID PFEFFER
DAVID PFEFFER

There are many situations that require access to neighboring properties.  One such situation is when repairs need to be performed under Local Law 11, which requires building owners to conduct one periodic inspection every five years for facades of buildings higher than 6 stories. These “critical examinations” ensure that buildings are in good repair and protect pedestrians from falling debris. Critical examinations regularly reveal defects and owners must perform the required remedial work or risk being assessed violations by the Department of Buildings.

To perform these repairs, owners often require temporary access to adjacent properties.  Many buildings extend up to the property line to maximize use and profitability of the underlying parcel. This can make building maintenance challenging because it requires entry onto neighboring parcels to perform the work, and access is not always granted freely.

With the latest Local Law 11 inspection cycle having begun at the end of February, many buildings will begin to evaluate their compliance over the next several months. Here are key considerations for those looking to access a neighboring property:

Gaining Access – Temporary Agreement or Court Ordered License?

Tensions often arise between the requesting owner’s need for access and the neighboring owner’s right to quiet enjoyment of their property and concerns about inconvenience and potential damage.  When conflicts arise, owners generally have two options – negotiate a mutually agreeable temporary license agreement or seek a court issued license for temporary access.  In this situation litigation usually benefits no one.  A well-negotiated temporary license agreement is often the most beneficial solution.

Challenges with Temporary Judicial Licenses

JOHN WALSH
JOHN WALSH

Petitioning a court for a temporary judicial license to access a neighboring property can have long-term negative impacts:

  • Litigation can be time-consuming and costly
  • Even when the petition is granted, the court may mandate bonds and insurance coverage from the requesting owner
  • Risk of damaging the relationship between neighboring property owners

Benefits of Temporary License Agreements

If possible, it is best for property owners to negotiate these matters privately and on their own terms. This allows for more flexibility and creativity in addressing both owners’ needs. Benefits include:

  • Cost-savings – license agreements avoid costly litigation and the potential judicial oversight of repair and renovation projects
  • Greater flexibility – they provide an opportunity for both parties to address their specific needs and concerns and reach a mutually satisfactory arrangement
  • Lasting relationships – negotiating rather than litigating encourages a more cooperative relationship between parties going forward, which can have be helpful if future issues arise
  • Owner perspective – owners have a better understanding of their own needs and the particulars of the project than any court ever will

Best Practices in Negotiating Agreements

A properly negotiated agreement should provide the developing owner with the required access to the adjoining property and ample protection for neighboring structures.  The main items to address in any temporary license agreement are:

  • License period
  • License scope (work parameters)
  • Protective measures for the neighboring property
  • Insurance and indemnification requirements
  • Negotiated license fee

License Period and Scope

The length and scope of access are crucial for the neighboring owner. Access to conduct repairs often requires an unsightly or noisy physical intrusion onto the neighboring property. Any neighboring owner will want a firm timeline or reasonable estimation for completion. This is particularly true when accessing residential properties. Providing detailed information about the scope of the work and access required will help facilitate agreement.

Protective Measures

Protective measures address both physical protections against debris and incidental damage resulting from the work (e.g. workers walking through prized flower beds), and limit the manner in which the work is performed, including hourly and day-of-week limitations. Required protections should be described in detail so both owners know what to expect.  The agreement should provide comprehensive safeguards for neighboring property and structures, based on the scope of the work.

Insurance and Indemnification Requirements

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Performing maintenance often requires access onto neighboring properties.

The insurance and indemnification requirements provide security for the licensor and help ensure that compensation for damages is timely received.  It is easy to overlook these provisions, but when unexpected damage occurs, it is important that the amount of insurance and terms of the indemnification provisions are sufficient to cover the resulting harm to avoid costly litigation. As a rule, the developing owner should name the neighboring owner as a beneficiary under the insurance policy for the project, and related contractors should also name the neighboring owner as beneficiaries under their own policies.

License Fee

The license fee should be negotiated to fairly compensate the neighboring owner relative to the inconvenience that granting access will impose.

When these terms are fairly negotiated, temporary license agreements represent the best chance to resolve an access dispute, reach a solution that is agreeable for both owners and avoid litigation.

David Pfeffer is Chair of the Construction Practice Group at Tarter Krinsky & Drogin LLP.  John J. Walsh is an Associate in the Construction Practice Group.

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