On February 28, the New York Senate passed Bill S8430A to amend New York’s Real Property Actions and Proceedings Law Section 881. The current version of Section 881, enacted in 1968, offers a developer judicial recourse when an owner or lessee of a neighboring building refuses access that a developer needs to improve or repair its own building. This judicial recourse comes in the form of a temporary license for access. Section 881 provides limited guidance on how or when courts will issue these temporary licenses, stating only that a “license shall be granted by the court in an appropriate case upon such terms as justice requires.” Over the years, New York courts have filled in the contours of Section 881, providing additional rules for what temporary licenses may cover and when they may be granted. These cases address topics, ranging from required liability insurance to compensation for a landowner’s loss of quiet enjoyment of their property.
New York caselaw currently dictates that Section 881 can only be used to gain access to install temporary measures, not permanent encroachments like tiebacks. Much of the proposed amendment codifies this caselaw with one massive exception: Developers can obtain a judicial license for permanent encroachments like straps, anchors, tiebacks, wall ties, and underpinning. For certain projects that require permanent encroachments, this amendment would effectively change how parties negotiate for access. Under the current version of Section 881, property owners can make large monetary demands to developers for usage of underpinning or the like on their project because courts do not grant licenses for permanent encroachments. Sometimes these demands are so great that developers must redesign their projects without permanent encroachments. This proposed amendment to Section 881 is a win for developers because it removes property owners’ trump card.
That said, property owners and lessees also get a win. Many other proposed statute modifications also would provide much needed clarity on the overall process of acquiring these licenses, as well as their limitations. Part of the proposed amendment sets out the purposes for which a developer may seek permission to enter a neighboring property, including installing scaffolding and/or protective covers, monitoring devices, or weather-proofing materials for walls, just to name a few. If a developer seeks permission on a category not enumerated in the statute, property owners can use that as a lever in negotiations. The amendment also sets out license conditions, including giving the property owner reasonable prior notice, just compensation for using the property, and a good faith projection of the dates and estimated duration of the entry. It also requires the licensee to maintain commercial general liability insurance. This proposed amendment could have a huge impact given that the construction industry in New York shows no sign of slowing down.
Troutman Pepper’s team of attorneys handles extensive work on Section 881 claims for developers, property owners, and lessees. If you have any questions about the potential impact of this proposed legislation, please contact us.