developer

When the developer next door comes calling

Recent New York City case raises questions about construction access
Thursday, January 4, 2018
By John De Vellis

With the boom in condominium construction and with land getting increasingly scarce, it’s likely that most condominium buildings, particularly in urban areas, will face a situation where a neighbouring developer requires access to their land for construction or a major renovation.

The type of access varies. The condominium may be asked for permission to allow a crane to swing over its property, scaffolding to be erected on its property, for its property to be used to shore up part of the excavation on the neighbouring property, or for construction materials to be stored on its property. But these are just a few examples. The possibilities are endless, and the disruption to the condominium’s residents can vary from minor to quite significant.

But just because the developer requires access to the condominium’s property does not necessarily means it has a right to it.

In some jurisdictions, the law allows neighbouring property owners to access adjoining properties for repairs or renovations as long as certain conditions are met. In New York State, for example, the law allows a property owner to apply for licence to effect repairs if the adjoining owner refuses to consent. In a case that gained some notoriety in New York City, the New York Public library went to court to get a licence after the board of a condominium adjacent to the library’s midtown branch refused to grant access to scaffolding and other construction equipment required for a $200-million renovation to the branch. The condo board has apparently asked for a licence fee of $450,000 or $15,000 per month during the planned 30-month renovation. (Editor’s note: New York Daily News has since reported that the project will proceed, without a fee, following a court decision.)

There is no such law in Ontario. When developers require access, they have to rely on either an easement in their favour, municipal right of access bylaws or an agreement with the condominium corporation.

The first question in these circumstances is whether there are any easements registered on title that require the condominium to provide access for the purposes of construction. In phased developments developers normally ensure that the early phases have easements on title requiring the condominium corporation to provide access for construction of subsequent phases. Where there is an easement the condominium may be required to grant access to the developer, but it’s a good idea to check with the condominium’s lawyer to see what, if any, conditions may be placed on the right of access.

Absent an easement, the legal right of access is limited. In some municipalities, such as the City of Toronto, a property owner can obtain a permit from the city in order to gain access to a neighbour’s property if such access is necessary in order to make repairs or alterations to any building. New construction or the total replacement of an existing building, however, is not included in the right of access bylaw.

Often the developer and the condominium will enter into an agreement granting the developer a right of access over the condominium’s property in return for certain concessions by the developer. The right of access often involves some sort of financial compensation. There is no set formula to determine the quantum, but the amount of compensation generally ranges depending on the degree of disruption to the condominium property, the amount of time for the required access, and even the nature of the development being built. It’s not unusual to see licensing fees paid to condo corporations of $20,000 or $30,000 or more. Often the access fees is negotiated as a monthly fee and payable as long as the encroachment exists on the condominium’s property.

But financial compensation is just the start. The access agreement is a good opportunity for the condominium to negotiate other concessions that may reduce the disruption or inconvenience that residents may face from the construction.

For example, an access agreement can specify when construction can take place, and limit the times the developer can access the condominium’s property. The developer may also be asked to agree to conditions to minimize debris or dirt and even to pay for window cleaning during or at the conclusion of construction. In one case, a developer agreed to erect a barrier to protect an art installation from dust and debris and agreed to have the art installation cleaned once construction was completed. In others, developers have agreed to erect similar barriers to protect for patios or terraces from construction debris.

Other concessions may be less tangible but nonetheless provide value to residents. For example, a developer may agree to implement a communications plan to keep residents informed of construction activity, and may be asked to curtail activity during certain religious holidays.

The developer should also agree to indemnify the condominium corporation for any property damage or liability for personal injury caused by the neighbouring building’s contractors.

Condo corporations will also want to ensure that the developer obtains insurance for the project and names the condominium corporation and its owners as additional insureds. The purpose is to allow the condominium corporation to make a claim directly with the insurer if something goes wrong.

The condo corporation should also have its own engineers review the construction plans. Often the developer will agree to compensate the condo corporation for these professional costs, as well as any legal fees incurred in negotiating the agreement with the developer.

So if a condo corporation is faced with construction next door, it should just remember the timeless advice from negotiating guru Chester Karrass: “You don’t get what you deserve, you get what you negotiate.”

John De Vellis is a partner and a member of the condominium law group at Shibley Righton LLP. He acts for condo corporations throughout south and southwestern Ontario on all aspects of condominium law including compliance and governance issues, general litigation, employment and human rights disputes, construction deficiency issues, shared facilities disputes, and commercial matters such as contract review and drafting, and advice on loan agreements and re-financing.

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