Case Notes in

Repairs

First published: Jul 2020
Salvator v. 55 Residents Corp.

The court’s ruling as to trespass is instructive. The court declined to adhere to form over substance. The decision’s implication is that had the corporation served the plaintiff in accordance with the proprietary lease – by registered mail to the apartment – the plaintiff never would have known that the corporation’s agent was going to enter the apartment, since he did not live there. Also instructive is the court’s ruling on breach of fiduciary duty. By making the claim only against the board, the plaintiff was able to avoid having the claim dismissed. As to infliction of emotional distress, there was nothing to indicate that the corporation’s conduct was “outrageous.” Now that the court has sorted out what appear to be the final pleading issues, it is anticipated that the case will go to trial – more than five years after it was commenced.

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First published: Dec 2013
Goldstone v. Gracie Terrace Apartment Corporation

This case raises interesting issues in that it specifically acknowledges that the co-op will be in breach of the proprietary lease by reducing the size of the apartment and requiring the reconfiguration of rooms. Notwithstanding, the court would not issue a preliminary injunction because this de minimis “taking” could be compensated by money damages and because the equities were such that the co-op’s concerns far outweighed those of the plaintiff. Notably, the court acknowledged the co-op’s obligations to all shareholders such that demolition and reconstruction of portions of the building – if other solutions were available – were not required. Given the particular (although not unique) facts of this case – that the space was being taken in connection with a repair to the plaintiff’s apartment, where the only other alternative was prohibitively expensive – we do not know how or if this decision will affect other situations where a co-op may wish to “take” a portion of living space from an apartment. Initially, the decision comes to us in the posture of a preliminary injunction, so that there is very limited precedential value. Regardless, we can envision situations where a co-op might want to enlarge a common area hallway (particularly in older buildings) to make it wheelchair accessible by reducing the size of someone’s closet or foyer. Will it be permitted (required?) to do so based on the holding here? Unlikely as such an outcome may be, it is certainly something that should be considered by boards and their counsel.

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First published: Dec 2011
Shapiro v. 350 E. 78th Street Tenants Corp.

In this situation, the co-op apparently attempted to solve its problem of a leaking and deteriorating roof by prohibiting the shareholder from using the area. The court stated that such a position violated the proprietary lease, which clearly gave the shareholder exclusive use of the area. In sum, the court found that – where a shareholder has use of an area of the building that the co-op has an obligation to maintain – the co-op must take steps to make sure that the area is available for its intended use. As the court noted, the plaintiffs paid for the right to use the area when they purchased, and paid for that right in their monthly maintenance charges. The question of what can be placed on the terrace was subject to the co-op’s standard alteration procedures, and the shareholders could not simply install what they wanted on the roof. As is typical, the co-op had the right to have its board and professional advisers review and approve any proposed plan to make sure, among other things, that the building envelope would not be damaged by any installation. We found the motion court’s reliance on the offering plan interesting. An offering plan is typically a “contract” between a sponsor/developer who converts the building to cooperative ownership and the shareholder who purchases from the sponsor. The plan may, in certain circumstances, be used for the purpose of clarifying an issue if it is ambiguous in the proprietary lease. We do not know why details of the offering plan were reviewed by the court in this case, although we suspect it was raised by one of the parties.

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First published: Dec 2011
Shapiro v. 350 E. 78th Street Tenants Corp.

In this situation, the co-op apparently attempted to solve its problem of a leaking and deteriorating roof by prohibiting the shareholder from using the area. The court stated that such a position violated the proprietary lease, which clearly gave the shareholder exclusive use of the area. In sum, the court found that – where a shareholder has use of an area of the building that the co-op has an obligation to maintain – the co-op must take steps to make sure that the area is available for its intended use. As the court noted, the plaintiffs paid for the right to use the area when they purchased, and paid for that right in their monthly maintenance charges. The question of what can be placed on the terrace was subject to the co-op’s standard alteration procedures, and the shareholders could not simply install what they wanted on the roof. As is typical, the co-op had the right to have its board and professional advisers review and approve any proposed plan to make sure, among other things, that the building envelope would not be damaged by any installation. We found the motion court’s reliance on the offering plan interesting. An offering plan is typically a “contract” between a sponsor/developer who converts the building to cooperative ownership and the shareholder who purchases from the sponsor. The plan may, in certain circumstances, be used for the purpose of clarifying an issue if it is ambiguous in the proprietary lease. We do not know why details of the offering plan were reviewed by the court in this case, although we suspect it was raised by one of the parties.

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First published: Sep 2010
Baker v. Bay Terrace Co-op Section XII

As we have previously discussed, specific contract language is important and must be reviewed when determining the rights of a co-op and its shareholders. The occupancy agreement required the co-op to maintain the premises in good repair, except under certain circumstances. Those exceptions did not include the situation here – where the co-op required access in order to perform exploratory work to locate a building wide leak. The court did not directly address that portion of the memo attached to the co-op’s rules and regulations which stated that painting was decorative and the responsibility of the shareholder. Because the court awarded Baker the full $850 he spent to paint and wallpaper, it is implicit that the co-op was responsible for the cost of restoring what Baker had in place prior to the exploratory work. This is an important consideration where a shareholder installs expensive finishings. Accordingly, we recommend that boards review all their governing documents concerning responsibility for repairs and decorations if repairs need to be made through no fault of the apartment owner. If it is the building’s responsibility, it is important that the board understands the cost of restoring the decorations.

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First published: Mar 2010
Katz v. Board of Mgrs, One Union Square E. Condominium

The court recognized the long-standing principle that a condominium board cannot be liable for breach of the warranty of habitability or constructive eviction because both require the existence of a landlord-tenant relationship, which is not present between a condominium and its unit-owners. The court also interpreted the bylaws, and the board’s actions thereunder, in the context of the Business Judgment Rule. The court explained the well-settled law that the bylaws form a contract between the condominium board and its unit-owners and determined that, because the board acted within its business judgment when carrying out its contractual obligations, it could not be liable for breach of the bylaws. Finally, the court considered a cause of action for breach of the covenant of good faith and fair dealing, which asserted that the board did not act fairly or in good faith when performing its obligations under the bylaws. Such a requirement – to act fairly and in good faith – is an implicit requirement in every contract. Although claims under this cause of action have been asserted for years in general contract matters, we are seeing them asserted more frequently in cases involving cooperatives and condominiums. As this court explained, however, once a determination has been made that the board acted in good faith so as to defeat a breach of the Business Judgment Rule, it is highly unlikely that a board will be found to have breached the covenant of good faith and fair dealing.

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First published: Jul 2009
Loss v. 407-413 Owners Corp.

This case illustrates the due diligence purchasers should perform if they buy a cooperative or condominium apartment. When buying, it is important to learn whether a prior owner performed work in the unit, whether the work was authorized by the cooperative, and who is responsible if the work requires repair or causes damage to your apartment or any other part of the building.Although not specifically discussed in this case, it appears as if this cooperative’s proprietary lease would require the tenant-shareholder to be responsible for repairs and any damage caused in the event the leaks were emanating from alterations performed by a prior owner. In addition, this case explains that a cooperative’s diligent efforts to locate the source of leaks, and to make repairs as directed by proper professionals, may create an issue of fact as to whether there is a viable claim for breach of the warranty of habitability, breach of contract, breach of fiduciary duty, and other claims. As a practical matter, we propose that, in most situations, if there are leaks into an apartment, a cooperative immediately attempt to address those leaks and leave the issue of who is responsible for paying costs associated with the work until after the repairs have been completed.

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First published: Oct 2007
Joan Messner v. 112 East 83rd Tenants Corp.

This situation happens fairly frequently in Manhattan. An apartment is purchased with an existing greenhouse, which was not part of the original building construction. Somehow the purchaser fails to learn for some time, at least until there are leaks, that this structure is one for which the co-op has no responsibility to repair. Then, a dispute with the co-op ensues over the repair responsibility. In most cases, as here, the co-op will prevail, but there are extenuating circumstances in some cases. The best solution would be for the co-op to explain the repair responsibility to the purchaser at closing, making sure to obtain an acknowledgement at that time from the purchaser that the co-op has no such repair responsibility.

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First published: Apr 2004
Robert Fleisig v. 75 East End Owners Inc.

This is one of a long line of co-op cases establishing the principle that where there are building repairs to be done by the co-op, the co-op determines the scope of such repairs, including the nature and extent, even if an affected shareholder prefers a different methodology or aesthetic.

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First published: Oct 2003
157 East 57th Street LLC v. Birrenbach

Although this case did not actually involve either a cooperative or condominium building, it might have and the issues would not be different. This case deals with one of the newest and hottest topics in real estate management. Mold, although arguably a less serious a hazard to most people than asbestos or lead paint, is the latest environmental hazard to receive considerable attention. Moreover, for people with severe allergies or asthma it can be a serious, even life- threatening matter. While mold has existed for centuries, there is a new awareness that water conditions in a residential building must be remediated promptly after occurrence so as to eliminate and prevent the development of mold. This requires well-managed co-op and condo buildings to establish operations and maintenance programs to deal with water conditions before they become mold problems.

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