Last week, the First Department issued a decision in the Matter of Panasia Estate, Inc., v 29 West 19 Condominium, et al., 2022 NY Slip Op 00975 (1st Dept Feb. 15, 2022) (click here to read the decision), which confirmed that, although not expressly stated, Section 881 of the Real Property Actions and Proceedings Law (“RPAPL”) authorizes awards of license fees, attorneys’ fees, or engineering or other design professional fees. This means that courts will order developers to pay an adjacent owner license fees and professionals’ fees incurred in negotiating a license agreement, as well as incurred by the adjacent owner in defending against an RPAPL § 881 proceeding — which has not always been the case.
Developers are required by, among other things, the New York City Building Code, to protect their neighbor’s property while performing construction. When a developer and an adjacent owner reach an impasse while negotiating a license agreement and an adjacent owner refuses access for the installation of temporary protection required by law, the developer can seek court-ordered access by commencing a special proceeding pursuant to RPAPL § 881.
This decision will undoubtedly have a significant impact on developers who seek to improve their property. Developers will need to account for paying their neighbors’ professionals’ fees and monthly license fees when developing their projects’ budgets. It will also, almost certainly, lead to an increased amount of RPAPL § 881 proceedings against adjacent owners who are emboldened by this decision and will delay the developers’ projects until they receive the compensation to which they believe they are entitled. As a result, courts will spend their time determining what license fee amounts are “reasonable.”
Developers will be smart to keep negotiations with adjacent owners on a short leash, offer reasonable compensation and commence RPAPL § 881 proceedings as soon as it is clear that the adjacent owner’s demands are unreasonable, so as to avoid any further delays of its project caused by the neighbor’s obstruction.
If you have any questions about the impact of this case on your property or any other questions, please feel free to contact us.
|Jason R. Davidson
Member – Litigation
|Brendan J. Derr
Associate – Litigation