Good Agreements Make Good Neighbors: Preparing A Fair Temporary License Agreement to Avoid Court Ordered Access

May 1, 2014

In a major metropolitan setting, open space can be hard to come by.  In New York City, the facades of many residential and commercial buildings extend right up to the property line, or near enough to prevent access to some exterior walls without encroaching on neighboring properties.  As a result, it is often extremely difficult, if not impossible, to make repairs or renovations to an existing structure without physically entering onto an adjoining parcel.  

Unfortunately for building owners and developers, the need to access an adjoining property does not automatically confer the right to do so; property owners have a right to quiet enjoyment of their own premises.  These two distinct interests often lead to conflicts between developing owners and neighboring owners, whereby the developing owner requires access to the neighboring property to facilitate repairs to his own property, and the neighboring owner refuses to allow it.  When these conflicts arise, the parties are generally left with two options: (i) the parties can negotiate a mutually agreeable temporary license agreement, or (ii) the developing owner can seek a judicially issued license for temporary access to an adjoining property under Real Property Actions and Proceedings Law (“RPAPL”) § 881.  A successful claim pursuant to RPAPL § 881 can permit a developing owner access to a neighboring property to effectuate repairs.  However, in this situation litigation usually benefits no one.  For the reasons discussed herein, a well-negotiated temporary license agreement is almost always preferable to a judicial license proceeding.

Unauthorized physical intrusions into a neighboring property are generally considered trespasses under the law, even when undertaken for a good reason (such as building repair).  However, with RPAPL § 881, New York State lawmakers have acknowledged the public utility of facilitating necessary entry onto adjoining parcels for the purposes of repair and improvement, while making certain allowances for the protection of the neighboring owner’s rights.   Unfortunately, obtaining an RPAPL § 881 license can have negative consequences.  First, there is no guarantee that a court will issue the license.  If it does, the court may require bonds and insurance coverage on the part of the developing owner,  and owners generally want to avoid judicial interference in such matters.  Most importantly, obtaining access via a RPAPL § 881 license may irreparably damage the developing owner’s relationship with the neighboring owner.  The stigma of bringing what amounts to a lawsuit to obtain entry can have potentially long-lasting and unforeseen detrimental effects on the property going forward.

Negotiated temporary license agreements are often a much more beneficial resolution for temporary access disputes.  Firstly, they avoid litigation, the costs thereof, and the potential judicial oversight of development projects that can result.  Second, temporary license agreements provide a greater opportunity for both parties to address their concerns and reach a mutually satisfactory resolution.  This differs from judicial proceedings, where one party generally emerges as a “winner,” and the other a “loser.”  Reaching an agreement, rather than litigating in court, offers much greater prospects of nurturing a cooperative relationship between the parties going forward, which can have unforeseen benefits when future issues arise (as they always seem to).  Third, and perhaps most importantly, the property owners have a better understanding of their own needs and the particulars of the project than any court ever will.  A fairly negotiated temporary license agreement allows the developing owner and the neighboring owner to address their individual concerns more completely than a court-ordered license might. 

A properly negotiated temporary license agreement should provide the developing owner with the needed access to the adjoining property, while simultaneously providing ample protection for the neighboring owner’s existing structures and use of the premises.  The primary items to be addressed in any temporary license agreement are: (i) the license period; (ii) the scope of the license (work parameters); (iii) protective measures for the neighboring property; (iv) insurance and indemnification; and (v) a negotiated license fee. 

(i) License Period

Access to conduct repairs often requires an unsightly or noisy physical intrusion onto the neighboring property.  As such, any neighboring owner will want some sort of firm timeline for the repairs, or at least a reasonable estimation.  This is particularly true when the neighboring property is a residential space, although commercial neighbors will want some sort of assurances as to the length of the project as well.  It is important to provide a realistic timeline for project completion, as projects that run long can often lead to disgruntled owners and unwanted litigation.

(ii) Scope of the License (Work Parameters)

It is important that the scope of the project is clearly defined in the body of the temporary license agreement.  A developing owner entering into an agreement that is unclear or fails to address all aspects of the required work, may find themselves knee-deep in a new round of negotiations halfway through the project to enter into a new license agreement, or even in court.  The scope of the work should therefore be defined clearly enough to provide the neighboring owner with an accurate understanding of what s/he is consenting to, while remaining broad enough to allow for minor changes to the project that may be necessitated by unforeseen complications.

(iii) Protective Measures for the Neighboring Owner

Protective measures come in two forms: physical protections against debris and incidental damage resulting from the work (e.g. workers walking through prized flower-beds), and protections that limit the manner in which the work is performed to protect non-tangible interests of the neighboring owner, such as hourly and day-of-week limitations.  Physical protections may include, but are not limited to, installation of protective barriers, erection of protective scaffolding, and preventative measures for dust and debris, depending on the type of project undertaken.  The physical protection work should be agreed upon between design professionals for both the developing owner and the neighboring owner, and the developing owner should agree to pay a reasonable fee to the neighboring owner so that the neighboring owner can hire an engineer.  This is customary practice, particularly when there is a resource imbalance between the developing owner and the neighbor. 

Non-tangible protections are often particularly important for residential neighboring owners, who may be much more willing to enter into an agreement if there are assurances that work will stop by five o’clock every evening, or that no work will occur on specified holidays.  This provision will vary significantly depending on the parties and the scope/duration of the project, and well-negotiated protective provisions will address the unique requirements of the project and the parties to the agreement.

(iv) Insurance & Indemnification

By law, a developing owner must indemnify the neighboring owner under RPAPL § 881, so any developing owner should agree to a provision in the temporary license agreement indemnifying the neighboring owner against any claims arising out of the work.  Furthermore, the agreement should contain insurance requirements on the part of the developing owner.  As a rule, the developing owner should name the neighboring owner as a beneficiary under the insurance policy for the project, and the developing owner should have contractors name the neighboring owner as beneficiaries under their own policies.

(v) Negotiated Fee

Developing owners should agree to a reasonable fee payable to the neighboring owner as consideration for entering into the temporary license agreement.  Willingness to provide a license fee greatly increases the developing owner’s chances of persuading a reluctant neighboring owner to consent to a negotiated license agreement.  Furthermore, courts have the ability to order a license fee under RPAPL § 881,  so the parties may as well agree to a mutually agreeable fee amount, as opposed to an arbitrary court determination.  The license fee should be based off of the term of the license, with provisions for an increased fee in the event the work proceeds beyond the negotiated term.  Providing for the increased license fee keeps the parties out of court in the event of unforeseen complications and delays in the project. 

Negotiated temporary license agreements represent the best chance to resolve a temporary access dispute for both developing and neighboring owners in a mutually satisfactory manner, and can avoid the bad blood often created by litigation.  For assistance with your temporary license agreement, or any other aspect of your next construction project, contact one of our experienced Construction professionals.   

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