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Imagine you are about to embark on that long-awaited, desired (and needed) construction project. You have been saving and planning for this project for a long time. The design is complete and the contractor is ready to go, and at that moment you are told that the scope of the construction requires you to enter upon your neighbor’s property. In fact, there is no alternative means of performing the construction without accessing your neighbor’s property and encumbering it in some way. What are your options? In the normal course of things, you, as the party requiring such access, would seek to obtain permission, or a license, to access your neighbor’s property. The terms and conditions governing such access would be contained in a license agreement (more about that below) entered into by you, as the party seeking access (i.e., the licensee), and your neighbor, the party granting such (i.e., the licensor). Clearly, this approach requires a willing and cooperative neighbor. However, what are you to do when such access is refused or an agreement cannot be reached? The answer lies in Section 881 of New York Real Property Actions and Proceedings Law (RPAPL), a somewhat old, but perhaps infrequently used statute that allows a project owner to petition a court for a license to enter upon a neighbor’s property. This article will briefly summarize the procedure for obtaining such court-ordered license and identify some practice pointers for potential litigants.

Terms of the Agreement

            Before examining the procedures for obtaining a court-ordered license pursuant to RPAPL §881, it would be remiss if this article did not provide a brief summary concerning certain, but certainly not all, terms that may be included in a license agreement, if one can be agreed to:

  1. The Grant of a License—a provision setting forth the scope of the license (i.e., what areas of the neighboring property can be accessed and by whom);
  2. Term/Schedule for the Work— provision setting forth the term of the license, upon the expiration of which, all work impacting licensor’s property will be removed;
  3. Payment of Expert and Legal Fees—licensor will want a lawyer and professionals to assist in the review of licensee’s work and the preparation of the license agreement. These costs should be borne by the licensee;
  4. Pre-Condition Survey—as the party seeking access, licensee will want to document the conditions of the neighboring property before work commences;
  5. Scope of the Protection Work—the scope of the work impacting the licensor property will need to be attached to the license agreement. This way all parties know what is to be performed and what is expected;
  6. Insurance—licensee, as well as its contract(s) performing the work, will need to obtain and maintain liability insurance. In addition, licensor should be named as an additional insured under such liability policy. Make sure all proper endorsements are issued securing such additional insured status;
  7. Indemnification—licensor will want to make sure the license agreement contains a broad indemnification provision, which will require licensee to indemnify and defend licensor from and against claims arising from the construction project and any work performed at the licensor property;
  8. Repair of Property—a provision setting forth licensee’s repair obligations should be well documented;
  9. Mechanic’s Liens—licensor will want to make sure that if any liens are filed against its property, licensee will discharge/satisfy such liens at its own cost;
  10. Termination—in the event of a breach of the license agreement by licensee, licensor may want the right to terminate the license agreement earlier than the natural expiration of the term; and
  11. License Fee—finally, licensor may seek remuneration from licensee for the use and encumbrance of the licensor property.

Looks Like Court is the Answer

The foregoing section presupposes that the parties can reach an agreement concerning the access and use of licensor’s property. This section, on the other hand, summarizes the procedure for obtaining a court-ordered license pursuant to RPAPL §881 when reaching an agreement is impossible, and also identifies certain practice tips in a litigant may want to consider in commencing such RPAPL §881 proceeding.

As noted, RPAPL §881 provides for the mechanism by which a party may apply to the court for a license to access a neighboring property.

Section 881 states that:

[w]hen 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.

As expressly noted in the statute, a party seeking access to a neighboring property may commence a special proceeding pursuant to Article 4 of New York Civil Practice Law and Rules (CPLR). A special proceeding may be commenced by the filing of a notice of petition and petition or an order to show cause and a petition. A litigant should consider the positives and negatives of either case, however, one potential benefit of commencing by order to show cause is its (generally) quicker return date. Only the owner of a property who seeks to make “improvements” to its property may commence such action, and in order to perform such improvements, a showing must be made that access to the neighboring property is required. Such party must state the facts making such entry necessary, the date on which entry is sought, and a showing that such entry has been refused by the neighbor. And, yes, such a proceeding is constitutional. Chase Manhattan Bank v. Broadway, Whitney Company, 24 N.Y.2d 927, 928-29, 301 N.Y.S2d 989, 990 (1969).

The term “improvement” is broadly defined and includes, among other interpretations, constructing a new building on land or performing such work that increases the value or utility of land or enhances its appearance. North 7-8 Investors v. Newgarden, 43 Misc.3d 623, 627, 982 N.Y.S.2d 704, 708 (Kings Co. Sup. Ct. 2014).

Taking the express requirements of RPAPL §881 into consideration, in granting a license, courts will apply a standard of reasonableness, conducting a balancing test by weighing the competing interests of the parties. MK Realty Holding v. Scneider, 39 Misc.3d 1209(A), 2013 WL 1482745 (Qns. Co. Sup. Ct. 2013) (relying on, Mindel v. Phoenix Owners, 210 A.D.2d 167, 620, N.Y.S.2d 359 (1st Dept. 1994)). A court will grant a license when the inconvenience of the licensor, refusing to grant such license, is outweighed by the hardship of licensee, if such license is not granted. Chase Manhattan Bank, 59 Misc. 2d at 930. However, it is important to keep in mind that no license issued by a court may permit a licensee to install or perform work on a neighboring property that would be considered, or result in, a permanent encroachment. Foceri v. Fazio, 61 Misc.2d 606, 607, 306 N.Y.S.2d 1026, 1017 (Qns. Co. Sup. Ct. 1969). Not surprisingly, property rights in the United States are sacrosanct and a court, at least pursuant to RPAPL Section 881, cannot require one party to accede to a scope of work that will permanently encumber its own property.

As the statute expressly requires, a licensee must state the facts making entry onto the neighboring property necessary, the date or dates on which entry, and that access to a neighboring property has been refused. This showing must be set forth in affidavit(s). Therefore, it is incumbent on a licensee to submit an affidavit from a construction expert (e.g., an architect, site-safety engineer or contractor) who can attest to the foregoing. In addition, such affidavit should state, among other things, the scope of the work impacting licensor’s property, and that no other alternative means are available to licensee to avoid impacting licensor’s property. It is also helpful to provide a copy of the drawings or plans setting forth the scope of the work to be performed on licensor’s property, and ideally, the plans will have been filed and approved by the applicable governmental authority having jurisdiction over the work.

In addition, and at minimum, a licensee will want to show that it will indemnify licensor, obtain insurance and name licensor as an additional insured under such insurance policy. In fact, it may be worth submitting with the moving papers a draft of a proposed license agreement. This will give the court a guide as it assesses whether, and to what extent, a license should be granted. However, it must be noted, that Section 881 does not require a court to issue a license, only that it provides a licensee to seek one. Matter of 155 W. 21st St. v. McMullan, 61 A.D.3d 497 (1st Dept. 2009). Further, any license issued by a court “shall be granted by the court in an appropriate case upon such terms as justice requires.” So, it would not be surprising to see that many of the provisions noted above, and potentially others, would be imposed by a court in granting a license.

Since an RPAPL §881 action is governed by Article 4 of the CPLR, discovery is limited. Indeed, CPLR §408 provides that discovery in a special proceeding requires court approval. However, courts have broad discretion in permitting discovery in special proceedings, and a trial may even be warranted if “triable issues are raised.” Greens at Washingtonville v. Town of Blooming Grover, 98 A.D.3d 1118, 1119, 951 N.Y.S.2d 201 (2d Dept. 2012); CPLR §409.

Is it Over?

Like any litigation, an RPAPL §881 proceeding can be expensive and relatively time consuming, however, in the absence of an agreement with a neighbor, it serves has a valuable option to allow a licensee proceed with its project and start making that dream a reality.

 

Jonathan Grippo is a construction and real estate transactional attorney at Goulston & Storrs, dealing particularly with issues related to senior living, multifamily, commercial office and condominium developments.