Requires developers to deposit a portion of the total estimated project cost into an escrow account for damage caused to neighboring properties during construction; provides that any work on a project shall be stopped until repairs are made on the adjoining property; provides that the New York city department of buildings shall develop a procedure whereby individuals who suffer damage as a result of the construction may be reimbursed within a period of sixty days.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A706
SPONSOR: Lentol (MS)
TITLE OF BILL: An act to amend the administrative code of the city of
New York, in relation to establishing escrow accounts to protect neigh-
boring landowners and tenants from damage due to construction
PURPOSE OR GENERAL IDEA OF BILL: Requires developers to deposit a
portion of the total estimated project cost into an escrow account for
damage caused to neighboring properties during construction.
SUMMARY OF SPECIFIC PROVISIONS: The Administrative Code of the City of
New York is amended by adding a new section 28-103.21 and a new section
JUSTIFICATION: This legislation seeks to address a serious problem
affecting long standing property owners whose property is damaged by
contractors building on adjacent property in the City of New York.
Currently, if a developer or contractor is working on property adjacent
to or near an existing parcel and damages the existing property, the
owner of the existing damaged building is held liable for correcting any
resulting violations to his/her property. Often the New York City Build-
ings Department, when called to intervene in such disputes, cites the
property owner-whose property was damaged by the contractor-for building
code violations despite the fact that the damage was entirely caused by
the contractor operating under a permit issued by the Buildings Depart-
ment. The innocent property owner often gets violations requiring the
payment of fines and may have to vacate his/her property until the
damage is corrected sometimes at great expense. The innocent owner will
likely not recover damages. Instead, he/she expends large sums of money
on legal fees incurred in a long drawn-out civil suit.
This legislation will require every developer to pay into an escrow
account which would be used for "quick claims" by injured parties, and
would create a system of processing these quick claims to allow injured
parties, property owners or tenants, to be made whole by negligent
contractors in a timely manner.
This legislation will also prohibit the Buildings Department from issu-
ing fines to property owners who have been victimized by the negligence
of those working on adjacent properties. If damages occur to an adjoin-
ing property, any and all work on such project will be stopped until the
damage property is repaired by the developer.
PRIOR LEGISLATIVE HISTORY: First introduced in Senate in 2010. First
introduced in Assembly in 2006.
FISCAL IMPLICATIONS: None to the State
EFFECTIVE DATE: Ninety days after it shall have become a law.
STATE OF NEW YORK
S. 991 A. 706
2011-2012 Regular Sessions
SENATE - ASSEMBLY(Prefiled)
January 5, 2011
IN SENATE -- Introduced by Sen. MONTGOMERY -- read twice and ordered
printed, and when printed to be committed to the Committee on Cities
IN ASSEMBLY -- Introduced by M. of A. LENTOL, MARKEY, MILLMAN, JACOBS,
COLTON, BRENNAN, ROSENTHAL -- Multi-Sponsored by -- M. of A. AUBRY,
COOK, DINOWITZ, GLICK, HIKIND, PERRY, PHEFFER -- read once and
referred to the Committee on Cities
AN ACT to amend the administrative code of the city of New York, in
relation to establishing escrow accounts to protect neighboring land-
owners and tenants from damage due to construction
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. The administrative code of the city of New York is amended
2 by adding a new section 28-103.23 to read as follows:
3 § 28-103.23 Developers' escrow accounts. 1. Any developer who plans to
4 construct any building within the city shall, prior to the commencement
5 of any construction, deposit ten percent of the total estimated project
6 cost into an escrow account.
7 2. An escrow account established pursuant to subdivision one of this
8 section shall be used to settle claims of property owners whose property
9 is damaged during any construction, or the claims of tenants who are
10 displaced from their residence as the result of damage to the property
11 from the construction. A developer shall be held strictly liable for any
12 damage or relocation expense that occurs as a result of the
14 3. In addition to the requirements imposed by subdivision one of this
15 section, if any damages occur to an adjoining property, any and all work
16 on such project shall be stopped until such damaged property is
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
 is old law to be omitted.
S. 991 2 A. 706
1 4. The department shall establish a claim procedure for property
2 owners and tenants who wish to file claims against the money set aside
3 pursuant to this section. Such procedure shall provide for a complete
4 resolution of a claim within sixty days from the date of its commence-
6 5. Any funds in the account that are not claimed by an aggrieved prop-
7 erty owner or tenant within six months after the completion of the
8 project shall be returned to the developer.
9 § 2. The administrative code of the city of New York is amended by
10 adding a new section 28-201.5 to read as follows:
11 § 28-201.5 Violations not caused by property owner. The department
12 shall not impose any fine or other penalty against any property owner
13 for any violation of the provisions of this title that occur as the
14 result of damage caused by construction on an adjacent building.
15 § 3. This act shall take effect on the ninetieth day after it shall
16 have become a law.