New York City’s high density presents unique challenges to developers as buildings are constructed and developed with virtually no space between adjoining buildings’ vertical support walls. In addition to requirements to safeguard its own development, a developer is strictly liable to safeguard the structures on adjoining property. Specifically, New York City Building Code sections 3309.4 and 3309.5 require all developers engaging in excavation or filling on their property to protect against damage to adjoining buildings, at their own expense (e.g., often requiring underpinning as a means to protect a building’s foundation).
A developer’s dilemma arises regarding the need to maintain the structural integrity of an adjoining building when the developer does not have the absolute legal right to access such property to take necessary protective measures. When access is not gained amicably, a developer’s sole legal remedy is to commence a special proceeding pursuant to Real Property Actions and Proceedings Law (“RPAPL”) § 881. However, a Court’s intervention pursuant to RPAPL§ 881 is limited to providing temporary access. This limitation had traditionally been interpreted by courts to prohibit a developer from accessing adjoining property to underpin a foundation because underpinning is considered permanent in nature and licenses are only for temporary access. In short, developers were literally and figuratively between a rock and a hard place.
However, there may now be some light at the end of the “development tunnel”. The recent decision in CUCS Housing Development Fund Corp. IV v. Clifford S. Aymes held that a developer had the right to access the adjoining property and underpin the foundation pursuant to RPAPL § 881. Notably, the facts in CUCS were very favorable to the developer inasmuch as the project involved affordable housing and the adjoining owners did not articulate any reason for not agreeing to the underpinning. It remains to be seen how this decision will be applied in the future to cases with less-favorable fact patterns when a developer seeks relief under RPAPL § 881.
Because of the uncertainty that had been created by the courts, I strongly recommend that a developer use its best efforts to obtain a written license agreement with adjoining property owners for access, especially when the necessary protective measures entail underpinning. To do so, a developer should be prepared to offer terms to make a license agreement more palatable to the adjoining owner, typically including identifying access times, paying professional fees and paying a small license fee.
In the big picture, any additional costs incurred to effectuate a license agreement are de minimis compared to the overall cost for the development project, the uncertainty of litigating any access issue, or the liability resulting from damage to adjoining property. It would also be prudent to attempt to resolve the terms of a potential license agreement in advance of going to Court, since it will look good to the Court at a future date.
Before executing a license agreement for access, we recommend that you consult legal counsel to ensure that your rights and legal obligations are adequately protected.