Who Are the “Parties in Interest” on a NYC Zoning Exhibit II and Why Should You Care?

In New York City real estate development, one of the most overlooked documents with outsized consequences is the Exhibit II to the Declaration of Zoning Lot Restrictions.

This Exhibit, required when merging tax lots into a single zoning lot, lists all parties in interest who have legal or equitable rights in any portion of the combined zoning lot. These are the people or entities who must either (a) sign the Declaration of Zoning Lot Restrictions or (b) waive their rights to do so, pursuant to Zoning Resolution §12 10(d).

In the typical case, this means:

• The fee owner of each lot

• The first mortgagee (and sometimes mezzanine or second lenders)

• Occasionally, long term ground lessees

But what happens when a contractor files a mechanic’s lien?

That contractor may now be considered a party in interest under the zoning rules. If you’re planning a zoning lot merger or need a zoning lot certification to proceed with your DOB filings, that lien could delay your project, complicate your title, or prevent insurance from being issued.

Why They’re Considered “Parties in Interest”

Under NYC's zoning law, a zoning lot merger changes the zoning envelope of a property. It allows development rights (floor area, light and air, etc.) to be pooled and redistributed across lots that may have different owners or encumbrances. When this happens, the property rights tied to one lot may become diluted or subordinated to the merged zoning framework.

Anyone with a recorded interest like a mortgagee or lienor has a legal stake in how the zoning lot is structured. Merging their collateral into a larger zoning lot without their consent could impair their rights, reduce the standalone value of their security, or complicate enforcement.

That is why Exhibit II is so important. It protects the rights of those parties and ensures they have had a chance to consent or at least waive objection to the merger.

Why It Matters

When a zoning lot is created, the city requires certainty that everyone with a recorded interest in the property agrees to the merger terms. The title company then issues what is often called a Parties in Interest Certification, confirming that all such parties have either joined or waived their rights.

If you miss someone, such as a subcontractor who quietly recorded a lien last month, you may find your permit applications stalled or your financing delayed until that party is addressed.

Best Practices

1. Order a full title search early, not just for your lot, but for all lots to be included in the zoning lot merger.

2. Review Exhibit II carefully. It is more than just a formality. It is the key to determining who needs to sign or waive.

3. Stay current on liens. Just because a contractor is not listed in your organizational documents does not mean they cannot become a “party in interest.”

4. Resolve liens before filing. Even if litigation is pending, a simple waiver can preserve your timeline.

Conclusion

The parties in interest certification might seem like a technicality. But in NYC, where zoning lot mergers drive air rights deals and large scale development, it can become a critical piece of your deal timeline.

And remember, if you do not like paying your contractor, they just might show up on Exhibit II.