Licensing Agreements

What is a common mistake that boards make when they create a licensing agreement with a neighbor that's either developing a new building or doing repair work?

There are two major mistakes I see my clients making. One is they want to be too neighborly, and the other mistake is that they want to be too tough. It's a real balance to get the protections you need for your building and your residents without going too far in the other direction, pushing the developer or the neighbor to a place where they're so frustrated and fed up with your unreasonable demands that they take you to court. And then you're at the mercy of a judge.

From a legal perspective, what’s the process for crafting the licensing agreement?

It starts with making sure that I know what my client's desires are, which comes from an initial site meeting with the client at the building to get the lay of the land. I need to see where bedrooms may be facing, who's affected, which terraces are affected, because even though you have an engineer and architect reviewing the developer’s or the neighbor's plans, there are sometimes quality-of-life issues that an architect or engineer is going to miss. They’re checking certain code requirements, but that doesn't necessarily mean that they understand how the residents are going to be affected by this work.

What kind of a quality-of-life issues come up in a licensing agreement?

Recently, I was directing a site meeting with the architects, the engineers, and my client at a building where there's a developer building next door. The architects were doing a great job communicating, and the client was doing a great job expressing what his needs were. It was a very productive meeting. But I asked the client, “Are there bedrooms facing the developer’s site?” And the answer was yes. And I said, "In that case, we've got to make sure that the developer's lighting plan is not going to be disruptive." We asked the developer to make sure that they put up the external envelope on that building facing our side first, and even that they alter their construction schedule to accommodate our client.

So that the light didn't pour into the bedrooms of your client's building?

That's correct, because there aren't any code requirements addressing lighting on the site, and the developer could have really intrusive lights.

What would be your advice to a board that's getting ready to go into a negotiation like this?

I think they need to be realistic about what they want. Sometimes boards will say, “We need to make $50,000 a month from this license.”

But the licensing agreement is not a cash cow, is it?

No, it's not. Reasonable license fees are certainly called for, but if you have a situation where you're getting five feet of bridging onto your property and it’s just your sidewalk – and there's no intrusion into private living space, or light or air, or ingress or egress – it’s really not a situation where you should expect a lot of money. You may push the developer or your neighbor to the point where they say, “This is not worth it for us financially.” If it's simply a Local Law project, you have to understand you're probably going to have to do it soon, too. It’s great if you can be neighborly.

You don't want to be a pushover, but you don't want to be too pushy.

That's right. And I can help my clients strike that balance.