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Volume 8 - Opinions of Counsel SBEA No. 110

Opinions of Counsel index

Real property, definition of (air rights) - Real Property Tax Law, §§ 102(12), 564:

The value of “air rights” above land and buildings may not be separately assessed except in those instances where State law has specifically provided otherwise.

We have been asked whether, as a general rule, “air rights” may be assessed as real property.

“Air rights” have been defined as “the right to occupy the space above a specified plane over, on, or beneath a designated tract of land” (see, Note, Conveyance and Taxation of Air Rights, 64 Columbia Law Review 338 (1964)). Although there is general agreement that air rights may have value, this does not mean that they may be separately assessed from the land or structure with which they are associated.

At common law, “air rights” were held to be real property in an action in which the plaintiff claimed he was ousted of possession of his property when the defendant unlawfully strung a telephone wire across plaintiff’s land. In Butler v. Frontier Telephone Company, 186 N.Y. 486 (1906), the Court of Appeals said:

So far as the case before us is concerned, the plaintiff as the owner of the soil owned upward to an indefinite extent. He owned the space occupied by the wire and had the right to the exclusive possession of that space which was not personal property, but a part of his land. According to fundamental principles and within the limitation mentioned space above land is real estate the same as the land itself. The law regards the empty space as if it were a solid, inseparable from the soil, and protects it from hostile occupation accordingly [186 N.Y. at 491 (emphasis added)].

With the advent of the airplane, the United States Supreme Court rejected as having “no place in the modern world” the ancient principle of law upon which cases such as Butler were premised, namely that the owner of the soil owned everything above and below it to an indefinite extent [“cujus est solum ejus est usque ad coelum”] (United States v. Causby, 328 U.S. 256 at 261, 66 S.Ct. 1062, 90 L.Ed. 1206 (1946)). Although the Court did not define the extent of control exercised by the underlying land owner, it did state that:

The landowner owns at least as much of the space above the ground as he can occupy or use in connection with the land. See Hinman v. Pacific Air Transport, 84 F.2d 755. The fact that he does not occupy it in a physical sense - by the erection of buildings and the like - is not material.

* * *

The airspace, apart from the immediate reaches above the land, is part of the public domain. We need not determine at this time what those precise limits are [328 U.S. at 264, 266].

The Supreme Court has also held that air rights do not constitute real property in the context of a condemnation case, that is, when development of air rights is restricted there is no “taking” which would invoke the protection of the Fifth Amendment (as applied to the states through the Fourteenth Amendment; see, Penn Central Transportation v. City of New York, 438 U.S. 104, 98 S.Ct. 2646, 57 L.Ed.2d 631 (1978)).

Although air rights may not be independent and separate parcels of real property, they may be extremely valuable assets (see, Penn Central Transportation v. City of New York, supra; 873 Third Avenue Corp. v. Kenvic Associates, 109 A.D.2d 489, 492 N.Y.S.2d 727 (1st Dept. 1985)). In certain instances, air rights have been considered so valuable that when a property owner is restricted in the development of those rights above one parcel, he may “transfer” these development rights to another parcel (Fred F. French v. City of New York, 39 N.Y.2d 587, 350 N.E.2d 381, 385 N.Y.S.2d 5 (1976)).

Nevertheless, unless otherwise provided by statute, an undeveloped air right has no assessable independent value, and may only be valued as an inseparable portion of the underlying real property. For example, where air rights are adversely affected, it is the diminution in the value of the land for which compensation is made, and not for any independent right to the air space (3775 Genesee Street, Inc. v. State of New York, 99 Misc.2d 59, 415 N.Y.S.2d 575, 582 (Ct. of Claims 1979)). Thus, when the use of undeveloped air space is restricted or disturbed the compensation would be for the loss of the value of the underlying property, not the loss of the air space. As “. . . the use of the airspace immediately above the land would limit the utility of the land and cause a diminution in its value” (Causby, supra, 328 U.S. at 262).

For purposes of real property taxation, “real property” is defined generally in RPTL, section 102(12). There we find but two references to real property including an intangible “right”. The first is in paragraph (b) of subdivision 12 of that section which provides that “buildings and other articles and ... the value of the right to collect wharfage, cranage or dockage thereon” are “real property” (emphasis added). The other is in the definition of a “special franchise” which includes both the physical or tangible property of a utility and the right to occupy the public way (§ 102( 12)(h), (17)).

In addition, however, section 564(2) of the RPTL provides that interests in State lands granted pursuant to Public Lands Law, section 3(4-a); Highway Law, section 10(38); and General Municipal Law, section 72-h(l) are separately assessable in the names of the lessees. Those sections of law authorize the leasing of rights in certain State lands, including a specific reference to air rights.

There are other statutes which define “real property” for a variety of purposes. In these contexts - limited though they may be - the Legislature has given its recognition to the theory that air rights may be separately defined from the underlying land, as these statutes provide that “air or space rights” are to be considered real property (see, Transportation Law, §40; Public Authorities Law, §§1972(8) and 2040-b(4); and Education Law, §§452(17) and 476(16)).

Thus, had the Legislature intended that air rights generally be deemed to be separately assessable real property for purposes of taxation, it would have made clear provision to that effect in the definition of real property in RPTL, section 102(12). Accordingly, except as otherwise specifically provided by statute (see, e.g., RPTL, §564), air rights may not be separately assessed.

Of course, improvements constructed in the air space over real property are deemed to be “real property” for purposes of taxation and may be assessed with the underlying land (RPTL, §102(12)(d); Application of New York Telephone Co., 257 A.D. 415, 13 N.Y.S.2d 359 (4th Dept. 1939), aff’d 282 N.Y. 667, 26 N.E.2d 805 (1940)). Where the improvements in the air space and the underlying land are owned by different individuals, each may be assessed separately to the respective owners (People ex rel. New York Elevated Railroad Co. v. Commissioner of Taxes, 82 N.Y. 459 (1880)). It is important to note that the assessor may not be compelled to separately assess those interests; such decision is totally discretionary (Doughty v. Loomis, 9 A.D.2d 574, 189 N.Y.S.2d 413 (3d Dept. 1959), aff’d 8 N.Y.2d 722, 167 N.E.2d 643, 201 N.Y.S.2d 100 (1960)).

May 2, 1986

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