Old Alterations, New Headaches

131 Perry St. Apt. Corp. v. Clauser

THE BACKSTORY

In 1998, the owner of an apartment at 131 Perry St., a co-op in Greenwich Village, replaced the terrace doors in her apartment with custom-made French doors. The board approved the plans, and both parties signed a consent agreement whereby the owner took full responsibility for the integrity of the work and for whatever maintenance might be required. Most importantly, all future purchasers of her apartment would be bound by this agreement. The consent agreement also said that “no transfer … of your proprietary lease shall be permitted unless you are in full compliance with this consent.”

Several years later, the apartment was sold to Mr. Clauser. In 2021, during a heavy rainstorm, water penetrated the terrace doors and caused flooding in the apartment below. The co-op’s architect inspected the doors and found them to be in a severe state of disrepair and in need of extensive maintenance.

Mr. Clauser claimed that when he purchased the apartment, he knew nothing of the arrangement in the consent agreement, nor did he sign anything with the co-op or the seller assuming any obligation for the doors. The co-op, on the other hand, claimed that he was responsible for the long-term maintenance and integrity of the doors, and sued him to pay for all repairs. 

THE COURT RULING

Since there was never a signed agreement between him and the previous shareholder who did the alteration, the court said he was not liable for the damage or the repairs. Additionally, the court noted that the co-op could have stopped the transfer of shares until he signed an agreement to be responsible for the doors, yet did not do so.

Interestingly, Mr. Clauser learned of the agreement between the prior owner and the co-op approximately a year after he purchased the apartment, and may have even paid for some minor repairs. But the court held that this was not enough to hold him liable, again stressing that there was no signed agreement and that a single event (paying for minor repairs) is not enough to modify the proprietary lease or bind him to the prior owner’s agreement with the co-op. The suit against Mr. Clauser was dismissed in 2022.

THE LESSON FOR BOARDS

This pattern is fairly common in cooperatives. A shareholder will undertake an alteration, and the alteration agreement with the co-op will state that the shareholder is responsible for the repair and maintenance of the new fixtures, walls, etc., and that subsequent owners will also be responsible. But decades later, when repairs are required, it turns out there is no agreement in which the new shareholder assumes the obligations under the alteration agreement. To make matters worse, management may not even have a file on this matter, since management often changes over the years. 

Unless the proprietary lease has precise language that binds the shareholder, there is little a board can do. Some co-ops require a purchasing shareholder to sign an assumption agreement of the prior lease as well as executing a proprietary lease. Some agreements include language that says the new shareholder assumes not only the old lease but also any other agreements between the (selling) shareholder and the cooperative. This might be enough to hold the new shareholder responsible for problems with a prior alteration.

Attorneys:

For the board: John Cutler Minikes & Adelman

For Mr. Clauser: Romano Law