Selling Air Rights

CONTENTS OF AN AGREEMENT TO SELL AIR RIGHTS

Experience counsel is needed like Kishner & and Miller to guide you on the various points of the transaction. Some of the key elements to a transaction are the following:

  • A. Statement identifying the parcel owned by each party to the agreement and referring to an annexed legal description of such parcels.
  • B. Statement that parcels are in the same block and are contiguous for at least ten linear feet (such statement does not apply to contracts dealing with transfers from non-contiguous Landmarked buildings.
  • C. Statement to the effect that the developer, as purchaser of the development rights, intends to build a building on its parcel that contains more floor area than otherwise permitted as of right under the zoning resolution and desires to acquire additional development rights to construct such building.
  • D. Statement that Seller agrees to sell and transfer the unused, excess or available development rights.
  • E. Statement that Seller is providing an easement for light and air to the Purchaser (i) If a light and air easement is being granted for unobstructed views, an elevation survey should be performed. An elevation survey determines the height of the highest structure on Seller’s building in terms of the Manhattan Datum in order to establish an elevation independent of the existing structures (structures come and go but light and air easements are placed on the land records in perpetuity). The Manhattan Datum is a system of measurement known as the Borough Works Datum of the Borough of Manhattan, which designates as zero an elevation which is 2.75 feet above mean sea level at Sandy Hook, New Jersey.
  • F. Statement that Seller retains rights to Unused Developments Rights in the event of up-zoning as more fully set forth to be confirmed in a Zoning Lot Development Agreement. Without the retention of up-zoning rights, the building may not benefit from an increase in the maximum permitted floor area for a certain district or from future technological achievements in construction and related zoning reform that may result in higher buildings throughout New York City.
  • G. Purchase Price.
  • H. Representation that to the best of Seller’s knowledge that there are no other parties in interest other than as set forth in the certification by the title company.
  • I. Representation that no liens or encumbrances affect the Development Rights.
  • J. Covenant by Seller that it will not make any application to the Building Department which will decrease or impair its development rights.
  • K. Covenant of cooperation with Purchaser in all reasonable respects, including the prosecution of all zoning and
  • variance applications relating to the Purchaser’s new building.
  • L. Acknowledgement that development rights are sold on “as-is, where is” basis without covenant or warranty.
  • M. Closing Date and Deliveries.
    • (a) If the contract is subject to DOB approving an application, the closing date is usually not a date, certain, but subject to an outside closing date and set by written notice from the Purchaser to the Seller If the closing date is not subject to Department of Building approvals, then it is usually a date certain with time generally NOT being “of the essence”.
  • N. Documents to be delivered at closing – this is statement of the documents required to be executed by both the Seller and Purchaser and delivered s closing.
    • (i) Declaration of Zoning Lot Restrictions whit is annexed to the Purchase and Sale Agreement as an exhibit (usually a one c two page document). (ii) A Waiver of Declaration of Zoning Lot Restrictions which needs to be executed by all parties in interest that are not executing the ZLDA, such parties usually include mortgagees, lienors and other parties in interest in Seller’s land and Purchaser’s land. (iii) Zoning Lot and Development Agreement (“ZLDA”) which governs the allocation of the development rights among the parties to the zoning lot merger and restricts future use and development of Seller’s land and may also restrict certain rights of Purchaser in event of up-zoning. (iii) Exhibit II – Certification of Parties in Interest which is prepared, executed and acknowledged by a Title Company. (iv) Exhibit III – Zoning Lot Description and Ownership Statement which is prepared by a Title Company and signed by the Developer and filed with the DOB and recorded in Land Records.
  • O. New York State Real Property Tax Returns – Agreements vary as to responsibility between Purchaser and Seller as to recording costs and transfer taxes.
  • P. Agreements vary as to responsibility of Purchaser for Seller’s architectural, engineering and attorney’s fees.
  • Q. Brokerage covenants – this provision provides representations as to whether or not a broker is entitled to a commission as the procuring cause of the transaction and usually provides for cross-indemnities by both parties with respect to claims by brokers at variance with the representation in the is provision.

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