Gerard S. Strain, Partner, Goetz Fitzpatrick in Legal/Financial
Access to neighboring buildings in the form of a license agreement is an important component of facade repairs and other building renovations. When a neighboring building wants access to your space, the first step is to ask for the architectural and engineering plans approved by the Department of Buildings. These documents, including a noise mitigation plan and details about whether or not they have weekend permits, will give you an idea of the extent of the project and can help identify the protections necessary for your building. With city-approved plans, the party seeking access will typically get a court license for access if the other party is uncooperative. Reasonableness is at the heart of successful license agreement negotiations.
License agreements. Typically, the parties seeking access will pay for the neighbors’ professional fees, including engineering, architectural and legal fees. They may also pay a license fee for the neighbor’s loss of space while work is carried out. Even so, the fees must be reasonable. Simple agreements, like protecting a rooftop with foam and plywood, should entail reasonable fees compared to more intricate projects involving structural modifications. Excavation work may require underpinning or tiebacks to reinforce retaining walls for stability. If there are complex engineering issues to address, it’s going to take longer to negotiate and draft the license agreement, so the fees will escalate. Understanding these details is crucial for safeguarding the interests of the building being accessed.
Delays and complications. Projects get stalled all the time, and in order to mitigate problems with payment delays for the affected co-op, it makes sense to ask the other side to put money into an escrow account that is drawn down as invoices occur. The party granting access will be incurring fees while its attorney reviews the agreement and its architect looks at the plans. Those escrow funds provide reassurance that fees incurred will be paid. The funds will typically have associated terms about when the monies are released.
Unit-owner or shareholder input. A board can't grant access to a terrace belonging to a unit-owner or shareholder without their permission. In situations like this, negotiations must be conducted directly with the owner. Flat-out refusal to grant access is unhelpful and will be contested in court, as will unreasonable fees. We’re currently challenging a $71,000 invoice for legal fees from a unit-owner who at first refused but then granted access for protections to their terrace while neighboring facade work was completed. Six similar license agreements were negotiated for the same project with other adjacent buildings, and those fees did not exceed $13,000. As a matter of law, it's up to the party seeking the fees to prove the reasonableness of the amount. And reasonableness is determined by the complexities of the project and the interference of the neighboring property. The license fee paid to an adjacent building for access needs to be proportionate to that.