In a landmark decision for New York real estate developers and owners, on August 2, 2018, a New York State Supreme Court Justice issued the first decision in New York history denying a temporary, limited license sought by a developer pursuant to Real Property Actions and Proceedings and Law (“RPAPL”) Section 881.
“[T]he Court is in agreement with the respondents in this matters. The Court is going to dismiss the petition for a license as it has been indicated that, although this may be solely about money, there are other factors with regards to the safety of the adjoining building that have not been addressed in this proceeding.
As set forth below, this historic decision dramatically impacts the rights of property owners.
By way of background, a notable developer (“Developer”) sought to construct a commercial building in Chelsea.
From the onset of its project, the Developer sought licensed access from the Board of Managers (the “Board”) of the adjacent condominium (the “Condominium”), and the individual owners of the units in the Condominium that would be most impacted by the proposed construction, in order to install protective measures required by the New York City Department of Buildings (the “DOB”).
Adam Leitman Bailey, P.C. was engaged by one of the unit owners (the “Owner”) to negotiate the required protections for his condominium unit based on Adam Leitman Bailey, P.C.’s extensive experience negotiating temporary and limited license agreements on behalf of both developers and owners.
During the course of negotiations for a license agreement between the Developer and the Owner, the Developer proceeded with the excavation of the property adjacent to the Condominium.
Unfortunately, the Developer made several erroneous assumptions regarding the structure and foundation of the Condominium. As a result, while the Developer was driving piles, which were to be used to support the future building, into the development site during excavation, the ground shifted under the Condominium.
As a result, the Condominium building significantly shifted, resulting in the Condominium building visibly leaning, and severe structural and physical damage to multiple units of the Condominium, including the Owner’s apartment.
The attorneys at Adam Leitman Bailey, P.C. immediately filed multiple complaints with the New York City Building Enforcement Safety Team (the “BEST Squad”), the special task force within the New York City DOB responsible for performing safety inspections of large construction projects, and for handling emergency situations.
In response to Adam Leitman Bailey, P.C.’s complaints, the BEST Squad sent an emergency team to review and inspect the safety and protective procedures used by the Developer to protect the adjacent neighbors. The failure of the Developer to take proper precautions to protect the Condominium was indisputable: the BEST Squad promptly issued an immediate stop work order against the Developer due to its failure to properly protect the Condominium.
Notwithstanding the severe damage, however, the Owner continued to negotiate in good faith with the Developer for license access to install protective measures.
These efforts were apparently viewed as too time consuming by the Developer due to the schedule of its project. As a result, the Developer commenced an RPAPL Section 881 action against the Owner, and the Board of the Condominium, for a court-ordered license to install the protective measures.
RPAPL Section 881 provides:
When an owner or lessee seeks to make improvements or repairs to real property so situated that such improvements or repairs cannot be made by the owner or lessee without entering the premises of an adjoining owner or his lessee, and permission so to enter has been refused, the owner or lessee seeking to make such improvements or repairs may commence a special proceeding for a license so to enter pursuant to article four of the civil practice law and rules. The petition and affidavits, if any, shall state the facts making such entry necessary and the date or dates on which entry is sought. Such license shall be granted by the court in an appropriate case upon such terms as justice requires. The licensee shall be liable to the adjoining owner or his lessee for actual damages occurring as a result of the entry.
Adam Leitman Bailey argued from this point, vigorously opposing the RPAPL Section 881 motion made by the Developer. Adam Leitman Bailey and Jeffrey R. Metz stated that while RPAPL Section 881 provides a license for access “as justice requires,” this case was one of the rare exceptions where justice required the denial of the granting of a license to the Developer due to the gross negligence and complete disregard exhibited by the Developer towards the Owner, and the other unit owners in the Condominium.
On August 2, 2018, the judge conducted a hearing on the issue regarding whether or not the Developer should be granted a temporary, limited license for access to the Owner’s apartment, and the Condominium pursuant to RPAPL Section 881.
Adam Leitman Bailey, P.C. argued that the Developer and its agents had acted liked “cowboys,” by failing to consider the impact upon and risks to the Condominium, and unit owners, during its construction. The firm also argued that the Developer only was self-interested in completing its project, at any cost and/or harm to its adjacent neighbors. The judge agreed with Adam Leitman Bailey, P.C.
Agreeing that the Developer, and its representatives, had acted like “Cowboys,” the Court held as following:
Counsel I have my decision. I have heard everything, you know, and just for the sake of the record, we in this part have something called the word of the day. The word of the day today is cowboy.
Article RPAPL (sic) 881 allows property owner to petition for a license to enter the premises of an adjoining owner when such entry is necessary from making improvements or repairs to petitioner’s property and the adjoining owner has refused access. A proceeding pursuant to RPAPL (sic) 881 is addressed to the sound discretion of the Court. Matter of Van Dorn Holdings, LLC versus 152 West 58th Owners Corp.
In determining whether or not to grant a license pursuant to that statute, courts generally apply a standard of reasonableness. Matter of Board of Managers of Artisan Lofts Condominium versus Moskowitz, 114 AD3rd 491 First Department 2014.
Courts are required to balance the interests of the parties and should issue a license when necessary under reasonable conditions, and where the inconvenience to the adjacent property owner is relatively slight compared to the hardship of his or her neighbor if the license is refused. See Board of Managers of Artisan Lofts Condominium 114 AD3d at 492.
Although the determination of whether to award a license is discretionary. RPA Penal Law 881 provides that a license shall be granted by the Court in an appropriate case upon such terms as justice requires.
Based upon the arguments and the papers submitted today and the colloquy had by Counsel with this Court, the Court is in agreement with the respondents in this matters.
The Court is going to dismiss the petition for a license as it has been indicated that, although this may be solely about money, there are other factors with regards to the safety of the adjoining building that have not been addressed in this proceeding.
The Court will encourage counsel to continue to negotiate this particular agreement so that construction may continue and end in a reasonable time and that the safety and all of the monetary requirements as requested by the respondent’s be met. . . .
So the Court is denying the petition at this time.
Accordingly, this case illustrates the importance that both developers, who need access to adjoining properties, and adjoining property owners, who require protection from intrusive and potentially dangerous construction next door, need to be ready, willing, and able, in good faith, to negotiate the terms of the license agreements that will reasonably and effectively serve the interests of both parties.
This case makes it very clear that, while adjoining property owners may not impose unreasonable conditions to frustrate the legitimate needs of a developer, the developer may not proceed cavalierly without due regard for the legitimate safety concerns of the adjoining owner or for the judicial consequences of their actions.
Adam Leitman Bailey and Jeffrey Metz argued the motion while Jeffrey Metz and Joanna Peck drafted and participated in the preparation of the motion papers.