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Neighbors are demanding 'ransom' from adjacent developments
Lawsuits are on the rise after an appellate court ruling last year made it harder to settle disputes
September 2017

Approximately 2 minutes reading time.  

When David Amirian was making plans to build a pair of luxury condo buildings on East 13th Street, he budgeted around $75,000 to compensate neighbors for the inconvenience of construction, including installing safety devices on their properties. He ended up spending half a million dollars.

“They went berserk and started asking for fees, lost rent and insurance,” Amirian said. “All neighbors see are dollar signs when they hear the word development.”

His East Village project, like nearly all in New York City, triggered a set of rules in the building code that requires firms to safeguard the properties of neighbors during construction or renovations. That can range from installing simple vibration sensors to erecting more invasive protections, including scaffolding, plywood and netting, around the building. Access is often also needed for activities like staging construction equipment. However, virtually none of it can be done without permission from the adjacent owner. And that permission is often granted only for a price.

Before a precedent-setting legal decision last year, developers and neighbors would normally resolve disputes on their own. An agreement would be reached that allowed a project to move forward and the adjacent property owner to be compensated for granting access to a building.

But in April 2016 an appellate court gave adjacent owners more bargaining power. That has introduced uncertainty into the development process as neighbors ask for higher payments and developers take them to court at an increasing rate.

Licensing fees

The origins of these agreements date back to at least 1968, when the administration of then-Gov. Nelson Rockefeller realized that property owners who did not want construction next door were holding up projects indefinitely by not granting access to their land to workers or for required safety protections. As a result Section 881 of the Real Property Actions and Proceedings Law was created, allowing developers to file lawsuits against intransigent neighbors.

Because judges were likely to grant access, simply the threat of litigation was under most circumstances enough to induce agreements out of court. But last year a decision was handed down in one of the cases that went to trial. It outlined for the first time what neighbors were entitled to: money to hire architects or engineers to look at the building plans and lawyers to draw up an agreement, along with a general payment called a licensing fee for the inconvenience of having to endure construction-related annoyances.

Developers concede that safety precautions are necessary but say the decision has helped embolden landlords and condo boards to ask for unreasonable amounts of cash, which is why an increasing number of builders are pushing back through the courts.

“There are landlords that use this as an opportunity to hold developers up for a ransom payment,” said Jared Epstein, vice president and principal of Aurora Capital Associates, which is constructing a mixed-use project in the Meatpacking District. “We have experienced this previously, and, instead of being extorted, we use the court system to secure the right to protect our neighbors’ properties.”

According to Dani Schwartz, a partner at Wachtel Missry, the number of 881 lawsuits has risen dramatically, likely buoyed by both the 2016 ruling and the burst of construction while the city recovered from the Great Recession.

“Over the last several years, it’s become challenging to even keep track of all the decisions,” he said. 
Robert Braverman, a partner at Braverman Greenspun who represents owners abutting development sites, says his clients are not acting unreasonably. “The owners of adjoining properties don’t want to be inconvenienced by construction and don’t want the attendant debris and noise,” he said. “It is true that the landscape has changed a bit in terms of payments, but I wouldn’t say that anyone is being taken to the cleaners.”

In addition to fees for lawyers and architects, Braverman says he typically helps neighbors negotiate a cash payment of around a few hundred to a few thousand dollars a month, depending on the scope of the access required and the length of the project.

Amirian’s East Village project was forced to take a much costlier approach. To construct the twin buildings he had planned, he needed to create permanent physical supports, called underpinnings, on his neighbors’ foundations. But because 881 lawsuits typically apply only to the installation of temporary safety measures, he could not easily use the statute to pressure them.

That left Amirian without any good legal options. In theory he could have attempted an 881 suit or argued that the city’s building codes required him to do the work, something he said he hadn’t wanted to do because of the time and money involved. But invoking building codes is a largely untested body of law, making a suit a risky proposition as well.

He would like to see the city or state take a more active role in regulating these types of agreements, much like Rockefeller did in 1968. His one chance to move the project forward was at the negotiating table. And it cost him.


    -
      Reprinted with permission From Crain's.

 

TODAY'S LAUGH

These are things people actually said in court, word for word, taken down and published by court reporters that had the torment of staying calm while the exchanges were taking place.
 
 
 
ATTORNEY: What gear were you in at the moment of the impact?
WITNESS: Gucci sweats and Reeboks.
 

ATTORNEY: What is your date of birth?
WITNESS: July 18th.
ATTORNEY: What year?
WITNESS: Every year.
 

ATTORNEY: How old is your son, the one living with you?
WITNESS: Thirty-eight or thirty-five, I can't remember which.
ATTORNEY: How long has he lived with you?
WITNESS: Forty-five years.
 

 
ATTORNEY: Now doctor, isn't it true that when a person dies in his
sleep, he doesn't know about it until the next morning?
WITNESS: Did you actually pass the bar exam?
 

ATTORNEY: The youngest son, the 20-year-old, how old is he?
WITNESS: He's 20, very close to your IQ.
 
 
ATTORNEY: She had three children, right?
WITNESS: Yes.
ATTORNEY: How many were boys?
WITNESS: None.
ATTORNEY: Were there any girls?
WITNESS: Your Honor, I need a different attorney. Can I get a
new attorney?
 

ATTORNEY: How was your first marriage terminated?
WITNESS: By death.
ATTORNEY: And by whose death was it terminated?
WITNESS: Take a guess.
 
 
ATTORNEY: Can you describe the individual?
WITNESS: He was about medium height and had a beard.
ATTORNEY: Was this a male or a female?
WITNESS: Unless the Circus was in town I'm going with male.
 
 
ATTORNEY: Is your appearance here this morning pursuant
to a deposition notice which I sent to your attorney?
WITNESS: No, this is how I dress when I go to work.
 
 
ATTORNEY: Doctor, how many of your autopsies have you
performed on dead people?
WITNESS: All of them. The live ones put up too much of a fight.
 
 
ATTORNEY: ALL of your responses MUST be oral, OK? What school did you attend?
WITNESS: Oral.
 
 
ATTORNEY: Do you recall the time that you examined the body?
WITNESS: The autopsy started around 8:30 PM.
ATTORNEY: And Mr. Denton was dead at the time?
WITNESS: If not, he was by the time I finished.
 
 
ATTORNEY: Doctor, before you performed the autopsy, did you check for a pulse?
WITNESS: No.
ATTORNEY: Did you check for blood pressure?
WITNESS: No.
ATTORNEY: Did you check for breathing?
WITNESS: No.
ATTORNEY: So, then it is possible that the patient was alive when you began the autopsy?
WITNESS: No.
ATTORNEY: How can you be so sure, Doctor?
WITNESS: Because his brain was sitting on my desk in a jar.
ATTORNEY: I see, but could the patient have still been alive, nevertheless?
WITNESS: Yes, it is possible that he could have been alive and
practicing law.
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WHO ARE WE?
We provide expert-witness testimony and litigation support for a wide variety of disputes involving real property valuation and tax issues, as well as appraisal services for commercial and residential property.

Visit us online or contact us to find out more about our services.  
BE A CONTRIBUTOR
We are seeking submissions.  If you would like to write the feature article in a future edition, please read our submission instructions and editorial guidelines.

If you have a case you  think is important or interesting we would be glad to post it on our web site (where it would also be archived). We will credit you for the submission.  Please send it to us.
CONTACT US
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Rye Brook, NY 10573

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