Crossing the (Property) Line Part Two: Amendments to RPAPL § 881 Pass Legislature, Await Governor’s Signature

Introduction

As previously outlined in an article published in a 2024 issue of the N.Y. Real Property Law Journal by Brian G. Lustbader and Katherine R. Peluso, New York City construction work almost always mandates protection of and access to neighboring properties.^[1] While the access terms of a license agreement can sometimes be negotiated with neighboring owners, the proposed terms are not always agreeable and often lead parties to pursue court intervention pursuant to Real Property Actions and Proceedings Law § 881 (RPAPL § 881).

For the past several years, proposed amendments to RPAPL § 881 have been circulating in the New York State legislature (“the Legislature”) between the Assembly and the Senate, but have never achieved final passage. This year was different. On June 13, 2025, the proposed amended bill passed both houses. The final text of the bill is now awaiting Governor Hochul’s signature.^[2]

The 2025 approved amended text of the bill is similar to the 2023 proposed text in that it (1) expands the definition of a refusal to grant access, (2) provides specific guidance on the conditions courts can impose for access, (3) provides an objective basis for courts to grant access for permanent encroachments such as underpinning, and (4) provides for additional conditions to protect adjacent property owners. Those items are addressed in detail in our 2024 article.

There are, however, several notable differences between the 2023 proposed text and the recently approved 2025 text.

2023 vs. 2025 Versions of the Bill

1. The 2025 approved text modifies the definitions of the terms “refuse,” “refusal,” and “refused” to state that they “shall be deemed to include instances where more than one written notice has been served by certified mail, on the owner and has not been responded to within sixty days.”
   1. The 2023 text previously only provided for “instances where a request has been made in writing and there is a subsequent absence of any affirmative response within a commercially reasonable time.”
   2. The current version thus provides an objective standard for requisite notice when neighbors are non-responsive and prevents developers from running directly to court without first attempting to make contact.
2. The 2025 approved text exempts the MTA and its affiliates from RPAPL 881, providing instead that “the court shall not grant a license” when the MTA owns, leases, or occupies the property in question. This will likely present a problem for developers who wish to build adjacent to MTA properties.
3. The 2025 approved text modifies the developer’s obligation to adhere to the duration of the license term. In the event that the developer requires additional time, it must “make a request to the court for an extension of such license.”
   1. The 2023 text previously required only that the developer “make commercially reasonable efforts to adhere to such dates and durations or provide timely notification of changes thereto.”
   2. The 2025 language seems to be aimed at incentivizing developers to adhere to their anticipated construction timelines in order to avoid further court intervention, but does at least provide a remedy in the event more time is needed.
4. The 2025 approved text modifies the compensation requirements to expressly state that the developer “shall be required to reasonably compensate the adjoining owner for the loss of use and enjoyment of the adjoining premises including diminution in value.”
   1. The 2023 text previously provided compensation “for the use and occupancy of the adjoining premises.”
   2. The 2025 language seems to be aimed at increasing the measure for the potential license fee, something that was more limited in the original text. It thus makes it possible for adjacent owners to obtain fees in the form of nuisance-type damages, lost rent, and extremely subjective decreased property value.
5. Last, the 2025 approved text has deleted several provisions from the 2023 version of the bill. The most significant of these is the following:
   1. The 2023 text allowed the court to “award reasonable attorneys' fees to either party upon a finding that the other party acted in bad faith or engaged in willful misconduct in seeking, denying, or conditioning its approval of the rights of entry that are the subject of the proceeding.”
   2. Omission of the foregoing text could make it more difficult for developers to claim attorneys’ fees when compelled to commence a proceeding under RPAPL 881 because a neighbor has issued unreasonable access demands.

Key Takeaways

While also present in the 2023 text, now that the bill is heading to the governor’s desk for her signature, the most significant overarching change is the Legislature’s decision to empower the courts to grant access for the installation of permanent encroachments, such as underpinning, tiebacks, flue extensions, and weatherproofing. If the bill is signed, adjacent owners will lose the leverage they previously had in negotiations when they could rely on the developer’s inability to get such relief from a court. This portion of the amendment may also result in constitutional challenges.^[3] 

Also of importance is the new concept of compensation for diminution in value of an adjacent owner’s property. If the governor signs this version into law, this change may lead to “battles of experts” to determine the proper amount to ascribe to such diminution and could thereby increase the length and expense of RPAPL § 881 proceedings.

Last, the removal of the attorneys’ fee provision for bad faith or misconduct “in seeking, denying, or conditioning [a party’s] approval of the rights of entry” will leave this determination entirely to the discretion of the courts. Courts in the First and Second Appellate Divisions have granted attorneys’ fees where one party has acted in bad faith by refusing to negotiate a license agreement. See, e.g., 419 BR Partners LLC v. Zabar, No. 156089/2022, 2023 N.Y. Misc. LEXIS 22 (Sup. Ct. N.Y. Cnty. 2023); Matter of AIH Group LLC v. C.J.F. & Sons Enters. Inc., No. 339/2019, 2019 N.Y. Misc. LEXI 2686 (Sup. Ct. Queens Cnty. 2019). However, the courts have more often denied such relief in these proceedings.

If Governor Hochul signs the 2025 bill into law, the license agreement and RPAPL § 881 landscape will be changed, with greater power for courts to provide more defined license terms. This could make license agreement negotiations smoother and less contentious. Or, it could have the opposite effect and make the interactions more difficult, resulting in greater judicial intervention. As always, it will still come down to the reasonableness of the parties and their desire to be good neighbors.

For assistance with analyzing these project requirements, please contact Brian Lustbader, Russell Wolfson, Katherine Peluso, or any of the other attorneys in our New York Construction Law Group.

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Venable LLP offers a broad array of legal services to a variety of different players within the construction arena. Our attorneys are adept at understanding complex client issues and tapping into the extensive experience of our many practice areas, including construction contract drafting, construction defect and delay disputes, employment disputes arising out of construction projects, state-specific incentives, and requirements for construction projects.