Selling air rights in NYC: an owner's guide

What to check before you talk price

1. 01

   How much is really unused

   Take the lot area times the district's maximum FAR for the use (ZR 23-22 for R6 to R12 residential) and subtract the floor area of every building on the zoning lot. If your lot was merged into a larger zoning lot years ago, the other buildings count. The free air rights check gives the starting number.
2. 02

   Whether anything was sold before

   Earlier declarations and transfers are recorded against the lot. Search the lot in ACRIS for declarations of restrictions and transfer instruments before you quote a figure.
3. 03

   Landmark status

   An individually designated landmark can use the certification route in ZR 75-42, which reaches more buyers than a merger. The LPC says individual landmarks inside historic districts are now eligible too (LPC fact sheet). A building that is only within a historic district is not a landmark for this purpose, though its owner can still merge with a neighbor.
4. 04

   Your lender

   A mortgagee is a party in interest under ZR 12-10: the holder of an enforceable recorded interest superior to the declaration that could result in obtaining possession. It must execute the declaration or record a waiver, and the loan documents may require consent. Ask early.
5. 05

   Condominium and co-op approvals

   The Zoning Resolution names the parties in interest; it does not say how a building decides internally. In a condominium each unit is separately owned, so who signs, and whether the board can sign for unit owners, turns on the condominium declaration and bylaws. In a co-op the corporation owns the property, and its bylaws and proprietary leases set what shareholder approval is needed. Have the building's counsel answer this before marketing the rights.
6. 06

   Tenants and other interests

   ZR 12-10 also counts holders of recorded interests that the declaration would adversely affect, and unrecorded interests that a physical inspection would disclose. Leases and easements on your lot belong on the list.

Three owners, three answers

How a sale proceeds

1. 01

   Size it and find the buyers who can use it

   For a merger that means lots on your block that touch yours for 10 feet or more. For a landmark it means the “surrounding area” in ZR 75-421: all lots on the landmark's block and lots across a street or street intersection from that block. A buyer who cannot fit the floor area will not pay for it, so expect the buyer to model its envelope.
2. 02

   Agree the terms

   Price per square foot, the exact floor area, light and air terms that limit what you may build later, cooperation with the buyer's filings, and who pays title, legal and any fund contribution.
3. 03

   Clear title and collect signatures

   Your lender, any other party in interest and the buyer's parties sign the declaration or record waivers. A title company certifies to DOB that every party in interest has signed (ZR 12-10).
4. 04

   Landmarks only: the certification

   The owners of both lots apply jointly to the City Planning Commission Chair under ZR 75-422 with site plans and zoning calculations, a program for the continuing maintenance of the landmark and a report from the LPC on that program. The LPC says applications require a public hearing, that the landmark must be in sound condition or have a plan to get there, and that in most cases 10 percent of the value of the transfer goes into a maintenance fund. The transfer instrument and notices of restrictions are recorded before the Chair certifies to DOB.
5. 05

   Record and close

   The declaration (or transfer instrument and notices) is recorded against both lots, and the buyer files with DOB using the combined zoning calculations.

Who is involved

• ■You and the buyer, each with a land use or real estate attorney.
• ■Your mortgage lender and anyone else with a recorded interest in either lot.
• ■A title insurance company licensed in New York, for the certificate DOB requires.
• ■The buyer's architect, who prepares the zoning calculations and shows the floor area fits.
• ■For landmarks: the City Planning Commission Chair, who certifies the transfer, and the Landmarks Preservation Commission, which reports on the maintenance program.
• ■The Department of Buildings, which issues the permit for the receiving building.

What you give up

• ■The floor area, permanently. A landmark transfer “shall irrevocably reduce” what the granting lot can build, even if the designation is later removed or the landmark is destroyed (ZR 75-422). A merged zoning lot can be subdivided only if every resulting lot and building complies (ZR 12-10).
• ■Room to enlarge your own building later, and possibly the right to build near the shared lot line, if you agree light and air terms.
• ■Shared limits. On a merged zoning lot, lot coverage and other bulk rules are measured across the whole zoning lot, so your existing building counts against the buyer's project and theirs against any future plans of yours.