Understanding Access Agreements: License Fees

In New York City, construction projects often require access to a neighboring property to conduct inspections, perform work, or install and maintain protections required by the New York City Department of Buildings (DOB). While access agreements are a routine part of construction, one key issue that frequently arises is whether a license fee should be paid—and if so, how to negotiate it effectively.

Is a License Fee Required?

Under New York law, property owners do not have an automatic right to access a neighbor’s property even if it is required to comply with applicable laws. Access terms must be negotiated. If an owner refuses access, the requesting party may seek a court-ordered license under RPAPL §881. In these cases, courts may impose a license fee to compensate the neighbor for the temporary intrusion on their property.

However, when access is granted voluntarily, the terms—including a license fee—are subject to negotiation and depend upon, in sum, the impact on the use and enjoyment of the neighboring property.

Negotiating in Good Faith

When negotiating access agreements, it is important to negotiate in good faith. Bad faith negotiations (such as demands for excessive fees, etc.) can lead to disputes, forcing the requesting party to seek court-ordered access at which time the requesting party may, among other things, seek to avoid reimbursing the property owner's attorneys' fees. Bad faith negotiations could even result in the property owner having to pay the requesting party’s attorneys’ fees.

Different Forms of Compensation

While many property owners condition access rights upon the payment of money, compensation could come in other forms. ?For example, property owners with upcoming repairs or renovations may see more value in reciprocal access instead of license fees, while others may see more value in having improvements being made on their property as part of the compensation or even in lieu of license fees.

Clear License Terms

Whatever is negotiated, it is important for the terms of the agreement to be clear and to remember that access agreements are not just there to govern the payment of license fees. Access agreements include many other important provisions such as those governing the performance of work on/from the neighboring property and repair, insurance and indemnification obligations. The importance of these and other provisions should not be overlooked.

Whether you are requesting access or granting it, understanding the basis for fees and negotiating effectively can help you SAVE time, REDUCE fees, and MINIMIZE conflict.

If you are looking to learn more, please feel free to reach out to me at [email protected] or at 212-624-4185.

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