How Your Neighbor Might Hold Your Renovation Hostage

When buildings need to place scaffolding on a neighbor's roof or temporarily close off a courtyard, some owners see dollar signs, while others face project-killing delays. As a result, the space between New York City buildings has become a surprisingly lucrative battleground. Dani Schwartz, partner at Offit Kurman, explains why neighboring access disputes have exploded over the past 15 years, and reveals the high-stakes negotiations happening right above your head. Schwartz walks through the delicate process of these negotiations, from the initial letter that can make or break a relationship to the courtroom showdowns that follow when talks collapse. With real examples ranging from modest rooftop access to a swimming pool standoff, this conversation exposes the hidden tensions built into New York's densely packed real estate and the creative strategies that sometimes prevent all-out war. Habitat's Paula Chin conducts the interview.

The business of running a building is demanding work that requires making endless decisions — some that can quickly lead your board into a quagmire of legal difficulties. Legal Talk interviews New York's leading co-op/condo attorneys to find solutions, and get some guidance, on these challenges. For more co-op and condo insights, sign up to receive Habitat's free newsletters or become a Habitat subscriber today!

Transcript

Paula Chin: Welcome to Legal Talk, a conversation about governance issues that New York's co-op and condo boards are tackling today. I'm Paula Chin with Habitat, the New York City magazine for co-op and condo board directors. My guest today is Dani Schwartz, a partner at Offit Kurman who's here to talk about access.

Sooner or later, every co-op or condo will have to ask their neighboring buildings for access to their property in order to do a capital project. And they're going to be asked by their neighboring building for the same. Unfortunately, things are often not so neighborly. Dani, can we start with the big picture?

Is this an increasing problem and why? 

Dani Schwartz: Absolutely. It is a very hot topic in the real estate and co-op and condo world and has been for about the last 15 years or so. In New York City, real estate is at a premium and developers and builders build right up to the lot line. Meaning there is very little and sometimes no space between neighboring buildings.

And what that in turn means is that if you want to do a renovation, rehabilitation or alteration project on your building oftentimes you can't do it without accessing your neighbor's property in some capacity, whether from their roof, whether putting scaffolding as an access point or otherwise.

And in addition the building code in New York requires that when a neighbor does construction or rehab renovation work to a significant degree, that it installed protections to protect the neighboring building from falling debris and bricks concrete and so forth. And I should add that Local Law 11 and associated laws in New York require periodic facade updating and improvement and maintenance. So it is absolutely an issue that every single co-op and condo will face at one point or another, and most likely many times over a period of years. 

Paula Chin: So how does a board get access to another building?

What's the process and what do you have to do? 

Dani Schwartz: Sure. Generally unless there is a very friendly relationship with the owner of the neighboring building, in which case maybe the board could reach out directly to a point of contact. Generally you want your lawyer to initiate the communication with a, a friendly not demanding letter, simply explaining we're gonna be doing a project, it involves X, Y, and Z, and you want to give sufficient detail to allow your neighbor to at least get a preliminary scope of what you're talking about. When people send vague or even ambiguous, deliberately ambiguous letters about future work that they intend to do and unspecified access that they'll require, if you're not necessarily getting off to the best start or on the right foot, you wanna give sufficient details so that the neighbor knows what they can expect, and you wanna assure them that you're going to do everything.

Necessary to protect their property and to minimize any intrusion onto their property. 

Paula Chin: So that includes the scope of the work, the actual access, or perhaps disruption you might cause your neighbor and the timeframe. Can a building be too specific? 

Dani Schwartz: It's possible that if there are items that you know are going to be sore spots or hot topics, that you may want to tread lightly on those issues and not highlight them, at least in the initial communication. It's a case by case analysis, but understand that at the end of the day, you will have to show all of your plans that affect your neighboring building to the neighbor.

And it is a virtual certainty in this day and age that they're going to have an architect or an engineer and sometimes both reviewing your plans to ensure that their building is going to be properly protected and that everything is above board. So it is possible to reveal too much, but I think in general you want to be candid.

You want to build a relationship of trust because it is rare that negotiations for neighboring access is as simple as an initial letter and a response saying, sounds great. Have at it. 

Paula Chin: So obviously you mentioned there, there is often trouble where the building being asked to give access, doesn't say yes.

I imagine it's signing a document. What happens when they say no? 

Dani Schwartz: If you have engaged in good faith and answered or addressed specific safety and protection concerns, and you feel that you've done everything that you could within reason to allay your neighbor's concerns, and they still say no, then New York has a law on the books. It's a statute called real Property Actions and Proceedings Law Section 881. Lawyers call it 881 cases or 881 proceedings. And what that statute, it's only a paragraph, what it says is that if you need to do improvements or repairs to your property, and you can't do that without accessing your neighbor's property, and they've refused to give you access to their property, then you can go to court on a special proceeding, which is an expedited and narrowly framed litigation to get a court order compelling your neighbor to give you access and permitting you under the aegis of the court to take the access that is required for your project. 

Paula Chin: What is the money involved? What are the costs on both sides, and is that often a sticking point? 

Dani Schwartz: I'll answer your second question first.

Is it often a sticking point? And the answer is yes. Absolutely. And there have been articles in the media the real estate media essentially saying that neighbors, who are being asked for access, some have come to view the request for access as a gold mine. And they say we can hold the development project, the repair project, whatever it is, we can hold it hostage by demanding an exorbitant license fee.

And if they don't agree. To pay it, then we won't agree to the, to give access, we'll delay their project, we'll cause them to go to court. And yeah, maybe they'll eventually get access through the court. They'll still have to pay us a license fee. Maybe it just won't be as much as we're demanding today.

So that dynamic does exist and part of the importance of starting out on the right foot and being candid with your neighbor about what you need and how long it's gonna take, is developing a relationship of trust where you're trying to avoid essentially a shakedown situation because again, it does happen.

And with respect to how much do license fees typically cost, the courts have said that the fee that a neighbor could be entitled to, is essentially based on what are they being deprived of. So if they don't have a roof deck and you need to put a scaffold on their roof deck to protect the roof from falling bricks, they're not really losing a use of anything.

So it's still fair to pay them something for the temporary use of their roof. But it's not they're really being put out and that it's a major intrusion for the tenants, residents, unit owners of the building. On the other hand if you, for instance, need to put scaffolding over your neighbor's swimming pool, or a courtyard, and essentially close off access to an important amenity, let's say, for your neighbor's building, then it's likely that the license fee that they're going to require or demand is going to be high. But the point is that it should be commensurate with the scope of the intrusion that you're making onto their property.

Paula Chin: Are there other things that a building might ask for? For example, if they have to bring in their own professionals, do they expect the neighbor requesting access to pay that money? 

Dani Schwartz: Absolutely they do. And in fact, the case law backs them up. What the cases have started to say fairly recently is that the neighbor has no interest in your renovation or maintenance or improvement project.

They don't care generally whether you do it or not. So if you need something from them, like access to their building, their roof, their balcony, whatever, their courtyard, whatever it is they should not have to go out of pocket. And what that means is they shouldn't have to go out of pocket for an engineer or an architect to review your plans, to make sure that they're safe and legal and often they shouldn't have to go out of pocket for a lawyer to negotiate and draft an access agreement with you, the board.

And so it is now expected that the the party doing the work, which in our scenario is a board is going to be requested to pay for essentially all out of pocket expenses of the neighbor because they didn't invite the work or the access. They don't care whether it happens or not, and they shouldn't have to pay to support your project. That's the logic anyway. 

Paula Chin: What if the building being asked to provide access is unreasonable? For example, they cause a delay for the building that needs to work. And let's say it's facade repairs which are mandated, and let's say because of the delay, that building gets fined or they have to go to court.

Does the neighboring building, the building being asked, therefore have to pay the other building's fees? 

Dani Schwartz: The answer is generally no. If you have an access agreement that you've worked out and signed that provides for that, that covers that scenario, then whatever the access agreement says is going to cover it.

But that just highlights the importance of being organized with your construction professionals and your lawyer, to notify the neighbor from whom you need access in advance of the start time for your project to say, here's what we need, here's when we need it, and to be firm and decisive.

So that if you feel you're being jerked around or toyed with or unreasonable demands are being made of you, you need to go to court. You cannot wait until it's too late. The court cases under this statute of the real property actions and proceedings law is designed, the court cases are designed to be quick, expeditious and very narrow. But you don't wanna wait until it's too late. So at the first sign, you're destined to fail in a negotiation, I typically advise clients, let's go to court.

And of course, there's nothing preventing the parties from negotiating a resolution while the court case is going on. And in fact oftentimes a court case is a necessary inducement to get a negotiated access agreement finalized because neither party oftentimes wants to take the risk of putting it in front of a judge and letting a judge decide what the access should be, what the timeframe and the scope should be.

That's something that engineers and architects should decide, not courts, and frankly, the judges would agree with that. 

Paula Chin: How do you figure out what fair compensation is for the disruption you cause a neighboring building? Do you have an example? I think you mentioned something about one building having to shut down the neighboring building's pool.

Dani Schwartz: It's a case by case analysis and it can be difficult. One data point is the collection of court decisions on license fees, which give a range of monthly fees, they're typically monthly, for a range of intrusions. And it ranges from the, 125 bucks a month to tens of thousands of dollars a month.

 Course the high end of that would be for an exceptional or extraordinary case where you're really intruding quite a bit on somebody's space and property, and possibly depriving them of the use and enjoyment of some special feature, like a backyard, a courtyard, or a swimming pool.

And so you try to put a value on who is using the amenity. How often are they gonna use it and how long is the intrusion? In the case of the swimming pool, which is a real example in a case that I was involved in, that is a unique amenity. Some buildings, apartment buildings have pools, but certainly not all.

And to have your own private pool at your own building is really a luxury. The unit owners were not happy that they were going to be deprived of the pool. And so it was difficult to come to a financial term that satisfied them and that was reasonable for the neighboring developer client.

Ultimately the insight that broke the impasse was that, look, the pool's only open from Memorial Day to Labor Day. 

So if you're demanding a large fee for depriving you of the pool, maybe that's not crazy. But that fee is essentially June, July, August. And if we are depriving you of your, depriving you of your pool in air quotes in September, October, November, we're not really depriving you of anything at all. Pool will be closed. So we will still have a scaffold and stanchions and so forth there, and you don't want it there. And we'll pay something for that access, which we need but it won't be what we're paying during the months that you're actually losing the pool.

So it's a case by case analysis. 

Paula Chin: I see. Have you been involved in any conflicts where a building balked and said, we're not going to do it, and they somehow had a strategy that ended up defeating the building that needed access? Does that happen? 

Dani Schwartz: It does happen, and frankly I've represented both developers and neighbors over the last 15 years or so in these types of disputes and cases.

And we do see it sometimes, and I've actually been asked by a neighbor, whatever it takes. The developer wants to take over our parking lot, do whatever it takes. Our parking lot is a special amenity. We can't lose it. Not for really any price that they would pay, not under any circumstance.

So there are frankly measures that, you know an astute attorney can take to if the client's desire is to delay. But there are also countermeasures that, for example, a board's attorney can take to counteract delaying measures. But I think at the end of the day, the key is to prepare as early as possible with your construction or Local Law 11 team and your attorney to have everything lined up and teed up so that the plans are good.

They're approved by Department of Buildings or the relevant authority. You've asked for access, you know what kind of access you need, you know how long it's gonna take. And you've negotiated in good faith and you can document the good faith negotiations from writings, typically emails, occasionally letters. And if all of that fails, people don't like litigation.

I get it. I'm a litigator and I tell people virtually every day, avoid litigation if you can. But particularly where time is of the essence, you don't wanna wait too long to go to court to get your license because if you wait too long and your work gets delayed, there could be all kinds of costs and consequences.

Paula Chin: I think you've already addressed it Dani, but what would you say the final takeaway is for boards? Let's do it from the side, those that seek access. 

Dani Schwartz: Sure. I would say again, preparation, advanced preparation is key. Having a lawyer who's not necessarily your general co-op condo lawyer, but somebody that handles these types of matters in particular and has the accumulated wisdom and experience in access matters and disputes is important, and being candid and, I would even say somewhat if not generous, then fair and reasonable with your neighbors is important. And also understand and don't hesitate to remind your neighbor they're going to need access from you at some point in the future. They will. It's not a question. The only question is when.

And so one thing you can do is try to build in reciprocal access provisions in an agreement. And that I have seen break an impasse before where we said to the neighbor, look, we think you're giving us a hard time. You think you're just protecting your own interests. We know you're gonna need access from us in the next several years.

What if you relent a little bit on some of your demands, and we put a provision in our agreement saying that when you need access that we will give it to you on substantially similar terms and conditions? Some negotiation starting point. And that has broken impasses before.

So I think the takeaways are preparation, the right lawyer, being candid and being fair. And I would say finally being a little bit creative, being able and willing to think outside of the box to solve problems. You don't want to go to court. But you may need to if your neighbor's being unreasonable or you can't break an impasse, but you don't always need to.

There are creative solutions to problems that can avoid going to court. 

Paula Chin: Dani, this has been really informative. Thank you so much for joining us. 

Dani Schwartz: Thank you. My pleasure. Great to talk to you.