Most developers know that the amount of FAR (Floor Area Ratio) on a potential lot is a determinative factor of the financial success of a project. As defined in the NYC Department of City Planning Glossary of Zoning Terms, “FAR is the ratio of total building floor area to the area of its zoning lot.” The size of your lot determines how much buildable floor area is permitted in your building by the building department. New York City is broken down into zoning districts that qualify as either Residence Districts, Commercial Districts or Manufacturing Districts. These three districts are further broken down based on a numerical code. So, Residence Districts can be numbered anywhere from R1 to R10 ranging from low density areas (R1) to high density (R10). The district designation is determinative of the amount of FAR allowable on your lot.
For example, a FAR of 1.0 on a 50 by 100 lot allows for 5,000.00 square feet of buildable floor area for a project. If a project is two floors, then 2,500 square feet of buildable floor area is allowed on each floor. Properties in suburban R1 districts usually have a FAR of 0.50. A 50 by 100 in an R1 with a FAR of 0.50 will allow for only 2,500.00 square feet of total buildable floor area. Take that same 50 by 100 lot and place it in a Commercial District, such as a C6 designation, with a FAR of 6, and your project allowance is 30,000 square feet of buildable floor area. The FAR of a property is significant in identifying potential development projects and the return on investment.
The NYC Department of Planning allows for developers to expand the FAR in a number of ways. The Inclusionary Housing Program expands FAR for projects that carve out a portion of dwelling units to be set aside for affordable housing; likewise adding a community facility, such as a senior center to a building, will increase FAR. Sometimes, the idiosyncrasies of a project can also lead to an expanded FAR. The ancient doctrine of adverse possession could play a role in increasing the FAR of your project.
Adverse possession is a legal concept dating back 1,000 years that allows a person who controls and possesses land owned by someone else to acquire valid title to it if certain requirements are met. These requirements include continuous (uninterrupted) possession, hostile to the rightful owner, through active use of the area in question where ownership is manifested in some overt way (e.g. a fence, cultivation of a garden, location of an air conditioning unit), open usage for all to see and exclusion of any other possessors. The adverse possessor must control the property continuously for a sufficient number of years. (In New York, this period is generally 10 years).
To show how adverse possession can frustrate development, a construction of a planned hotel in Manhattan’s diamond district has been stalled for three years because a neighbor has claimed possession of an 18-inch strip of land on the planned hotel’s site; specifically, the adjacent property’s antennas, air conditioning units, and a ventilation unit overhang
this strip. For our purposes, we are interested in how adverse possession can, in fact, enhance development.
During the due diligence phase of a project in lower Manhattan that we were insuring, our research found a rectangular area at the rear of the premises was not described in the last several deeds of record. Interestingly, said area (which was approximately 3 feet by 30 feet) was not described on any deeds of the contiguous lots either. Surveyors sometimes identify this sort of area as a “gore” which is defined in Black’s Law Dictionary as “a small piece of land such as may be left between surveys that do not close.” A gore is a “no man’s land,” described on no neighboring deed and identified on no survey. Many times a gore will be a triangular piece since it is created by property lines whose angles have erroneously wandered over various deeds until the gore has been carved out through inexact descriptions. The reasons behind this gore did not reveal themselves at first and further inquiry was required.
We looked back through the history of tax maps and deed descriptions on the block hoping to identify the last owner of the seemingly abandoned strip of land would be the current owner, thus cementing the rightful ownership of the gore as part of the premises under examination. Looking back to tax maps from the late nineteenth century and descriptions as far back as the early nineteenth century, the gore was not shown as part of any of the lots on the block. We found one early map that showed an alley in the center of the block that seemed to have access to a public street at one time; the gore area behind the premises was all that remained of that alley. This mysterious alley, that appeared on no documents since the nineteenth century, appeared to have no identifiable owner. Remarkably, this orphaned 90 square foot area sat in southern Manhattan—one of the most expensive real estate markets in the world.
With no apparent legal owner of this strip of land, what was to become of it? One piece of evidence helping to attach this area was inclusion of this strip of land on the tax map of the premises in question. Frequently, when identifying ownership, an important question to ask is who is paying the taxes? Since the strip of land was included as part of the premises, owners of that lot had been paying real estate taxes on the land for decades. After asking who is footing the bill on the land, the next question is who is using the land. Here, air conditioning compressors were situated on the strip of land. Looking at the cables, it was clear these units serviced the building located on the premises. Once the date of installation was confirmed as being more than ten years ago, with no neighbors manifesting control over the area and the usage by the current owners being open, the claim for adverse possession of the strip was strengthened. Usually, adverse possession works against a known owner of contiguous real property to allow a neighbor to claim superior ownership. In this case, it worked to thwart off any other claimants, although no other owners appeared to make a claim for the land.
Of course, with millions of dollars invested in a project both in capital and building loans, it may be uncomfortable to rely upon the concept of adverse possession in expanding the FAR. The facts revealed in the situation at hand establishes strong evidence that bringing an action to quiet title would provide a favorable judicial determination of the ownership of
the area. Such a determination can be relied upon to expand the size of the lot and the corresponding FAR, thus increasing the profitability of the development site.
Real estate is unique, and every project has its own quirks and challenges. Not every potential development will have these distinct circumstances which lead to the increase of buildable area through the capture of land lost to history. However, meticulous analysis of a proposed project and outside the box thinking can allow a diligent developer to expand the potential FAR of a development site through this ancient real property concept.