New York County is the most densely populated county in the country, with over 70,000 inhabitants per square mile. Developing real property in this dense cityscape poses logistical and legal challenges when the need to access a neighboring property arises. Access agreements are contracts between property owners that grant permission to enter another’s property to make improvements or repairs. Access agreements address potential risks and liabilities, and cover, among other details, the scope and duration of access, including start and end dates, as well as compensation for the owner of the accessed property. However, in the event property owners cannot agree on an access plan, there are still legal means of obtaining access.
The Real Property Actions and Proceedings Law § 881 (RPAPL § 881), enacted in 1968, created an expedited process wherein property owners and their lessees can obtain a temporary license to access adjoining properties to make improvements or repairs if they are declined access by the adjoining property owner. According to RPAPL § 881, this license can be sought if (i) “such improvements or repairs cannot be made by the owner or lessee without entering the premises of an adjoining owner or his lessee, and (ii) permission so to enter has been refused.”
Understanding Current Case Law: Panasia Estate, Inc. v. 29 West 19 Condominium, et al.
In 2019, the developer Panasia Estate, Inc., which owns the property located at 33 West 19th Street, reached out to two adjoining properties to negotiate an access agreement to install protections. The neighbors conditioned granting a license on having their legal and professional fees reimbursed, as well as a substantial license fee to compensate them for their not being able to use their spaces during the proposed construction.
When negotiations failed to reach an agreement, the developer filed a proceeding against the adjoining property owners pursuant to RPAPL § 881 for a court order granting temporary licensure for access to the neighboring property.
The court granted access to the developer at a lower license fee than what the respondent had previously requested but conditioned that access on their paying a license fee and the respondents’ legal and engineering fees, which totaled around $70,000. The developer appealed, arguing that RPAPL § 881 does not authorize the court to award professional fees.
In 2022, the Appellate Division rejected that argument, which determined that “the American rule does not preclude an award of fees to respondents under RPAPL § 881.” Despite this, the appeals court reduced the license fee awarded to the adjoining property owners and remanded for evidentiary hearings to determine the legal fees they incurred. The lower court determined that those fees were over $250,000. Panasia Estate, Inc. has once again appealed the court’s decision.
In 2024, New York State’s highest court, the Court of Appeals, held that professional fees were to be reimbursed by Panasia Estate Inc.
The Takeaway
Access agreements remain a contested issue when construction occurs. The New York State legislature attempted to address this issue with the introduction of S1305, which would have added a provision that a party may be entitled to reimbursement of attorney’s fees if another party acted in “bad faith.” However, this legislation did not pass the New York State Assembly. As a result, the party seeking access to a neighbor’s property should weigh the prospect of their own attorneys’ fees and the adjacent property owner’s attorneys’ fees before pursuing an action pursuant to RPAPL 881 if the adjacent property owner is not acting reasonably.
The foregoing is not intended to be comprehensive nor constitute legal advice. If you would like to discuss your specific circumstances or would like more information, feel free to contact us at (212) 625-8505.