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Appeals Court Grants Access License to Adjoining Property Owner, Subject to Conditions and Fees

Especially in a crowded city such as New York, a property owner doing construction or maintenance work on its property will often need to gain access to an adjoining property for purposes such as staging the work.  In the best case, arrangements for such access are worked out directly between the two adjoining owners.  In negotiating such matters, the owner being asked to provide access should remember that someday the tables may be turned, and he or she may be the one needing access to the neighboring property. 

When the two owners are unable to reach agreement to allow access and on what terms, the owner requiring access can bring a court proceeding under Section 881 of the Real Property Actions and Proceedings Act (RPAPL), asking the court to grant an order allowing access.  Such a court order will typically be subject to conditions, such as limitations on the nature and duration of the mandated access as well as insurance and indemnification for any damage that may result.  

            The Appellate Division reviewed the provisions of Section 881 in Matter of Panasia Estate, Inc. v. 29 West 19 Condominium, 2022 N.Y. App. Div. LEXIS 974, 2022 N.Y. Slip Op. 00975 (1st Dep’t Feb. 15, 2022).  The petitioning owner wished to add two stories of office space to the top of its existing building.  In connection with these planned improvements, petitioner sought access to several neighboring properties for purposes including conducting a pre-construction survey as well as installing overhead protection, roof protection, flashing, and an outrigger and netting system to protect the neighboring properties.  The parties negotiated concerning the potential terms of an access license but were unable to reach agreement, and petitioner filed an RPAPL 881 access proceeding. 

The lower court granted petitioner a license to access the adjoining properties subject to payment of license fees totaling several thousand dollars per month, increasing over time.  The lower court also directed petitioner, as a condition of the license, to reimburse the neighboring owners for attorneys’ and engineering fees, to post a $1 million bond, and to provide proof that the neighbors had been named as additional insureds on petitioner’s relevant insurance policy.  All the parties appealed from different provisions of this order. 

            The petitioning owner argued on its appeal that RPAPL 881 does not authorize awards of license fees, attorneys’ fees, or engineering or other professional fees.  The appeals court disagreed.  It observed that the statute allows the court to grant an access license “upon such terms as justice requires.”  It reaffirmed prior decisions holding that an owner required to grant access to its property against its will should not be forced to incur costs, such as attorneys’ or engineering fees, resulting from the unwanted intrusion.  

The court also disagreed that imposing a licensing fee would confer a “windfall” on the adjoining owner in the absence of actual financial harm such as lost income.  Rather, a license fee is warranted “where the granted license will entail substantial interference with the use and enjoyment of the neighboring property during the [license] period, thus decreasing the value of the property during that time.” 

            The appellate court found that the lower court had failed to identify an evidentiary basis for the amounts of the engineering and attorneys’ fees that had been awarded, and directed that these awards be recalculated based on the actual expenses incurred.  The court also deleted the provision for escalation of the license fees over time, which it regarded as “punitive,” and required that the insurance requirements for the license be made more specific.  Finally, the court agreed with the adjoining owners that the license should have an outside time limit of 24 months, and directed that the petitioner “timely commence the project and proceed diligently.”