First published: Oct 2022
When A Receiver Does the Board’s Job
Boards must accumulate sufficient reserves to finance anticipated and unanticipated repairs to common elements, especially when individual unit owners are suffering ongoing damages. Remember, unit owners do not have the right to repair common elements on their own. Here, the court properly took the matter out of the board’s hands, but the methods employed by the receiver may be less efficient or economical than if the board had acted on its own. On top of this, the board will have to pay the receiver fees and costs associated with the job. Unit owners will not appreciate a board that ignores legitimate complaints from residents, incurs significant legal fees, needs to reimburse fees from affected unit owners, and, on top of everything, pay receiver commissions as well.
CALDERONI V. 260 PARK AVE. S. CONDO.
The situation. The 260 Park Avenue South is a boutique condominium in Manhattan’s Flatiron district that was converted from two neoclassical buildings in 2004. For years, several owners residing in apartments one floor below the penthouse units have complained of damaging leaks, and have been unable to occupy their respective apartments from seven months to more than three years. The apparent cause was a roof not sufficiently waterproofed and with inadequate drainage. The board had hired contractors to fix the problem, but apparently ran short of money and the contractors had walked off the job. Additionally, a rooftop swimming pool owned by one of the penthouse unit owners exacerbated the situation.
What happened. The unit owners sued the board and managing agent, claiming that a deficient rooftop and drainage system caused substantial infiltration of water into their units, rendering them unsafe and uninhabitable, and that they could not be repaired until the building’s defects were remedied. They charged that the board and its managing agent were obligated to repair this common element, remediate the water penetration, and repair their units. Additionally, they claimed that the board was dysfunctional because it had failed to obtain a quorum at its meetings in order to take necessary action, and this was a breach of its duty, pursuant to New York’s Condominium Act, RPL§ 339-cc, to repair and maintain damage to the common elements. Last, the unit owners sought equitable relief and the appointment of a temporary receiver to carry out the repairs, restore the units to habitable condition, and oversee the necessary financing.
The court ruled. The unit owners’ application for appointment of a temporary receiver was granted. The receiver will have the authority to repair the condo’s rooftop, drainage system, and other common elements causing water infiltration; to raise the funds required, including assessments; to pursue available insurance coverage or obtain a loan; and to direct the condo’s current managing agent to act within this scope. The board wanted the complaint against it dismissed for failure to state a derivative or individual cause of action, which the court denied. The board is appealing this decision. COUNSEL For the unit owners BARTON LLP, DUVAL & STACHENFELD / For Condo Board and Management Company GALLO VITUCCI KLAR LLP / JUDGE William Perry
