Case Notes by

Andrew Brucker, Armstrong Teasdale

First published: Apr 2024
Know When to Fold

TAKEAWAY The most interesting part of this case involves the “seller’s concession” often used in New York to artificially boost the purchase price of co-op apartments. This practice is quite common, and is used so as to create higher comparables for the building. But this court sees through this practice, and seems to indicate that one cannot compare recent sales prices (which include concessions) to a third-party appraisal that reviews actual sales prices. Of course, it may be difficult for a court to ascertain which comparables in the appraisal included prices with concessions and which did not, but as noted by the court, this should be determined by a trial court. Further, this court indicates that it is not reasonable for a board to ever insist on a certain price, if the higher price it demands is established simply by creating the fiction of a “seller’s concession.”

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First published: Feb 2024
Handling a Hoarder

Beekman East was successful in court not only because the facts were so extreme but because the language in the governing documents was comprehensive and clear. It’s advisable for every board to review with its attorney the bylaws and house rules (and the proprietary lease in a co-op) to be sure that the language regarding accessing apartments is very strong and broad. This vigilance will lead to a successful outcome if the owner decides not to give access when the board requires it to conduct an inspection, make repairs or exterminate pests.

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First published: Nov 2023
The Fallout From a Ladder Fall

TAKEAWAY There is little to be done about a law that finds you liable though you did nothing wrong. New York’s Labor Law can seem cruel at times. There is a very important lesson here, however, and that is before a board allows a renovation, the shareholder must sign an alteration agreement. This is critically important. Not only will it set forth the rules for a renovation (which if broken, the board can ask a court to suspend the work), but it will also require a shareholder to indemnify the cooperative (or condominium) in the event the renovation causes a problem, whether it occurs during the renovation (such as drilling into a gas pipe) or after (a leak results years later from defective plumbing). Alteration agreements must be reviewed, updated, signed and kept in a safe place for future reference. A board might consider an extra copy to be placed either in a safe place (i.e. a board room), with their lawyer or some other alternate location. That’s how important an alteration agreement can be.

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First published: Sep 2023
The Dangers of Hoarding

TAKEAWAY Beekman East was quite successful in court, not only because the facts were so extreme, but because the language in the governing documents was so good. It’s advisable for every board to review with their attorney the by-laws and house rules (and proprietary lease, in a co-op) to be sure that the language regarding accessing apartments is very strong and broad. This vigilance will lead to a successful outcome if the owner decides not to give access when the board requires it for an inspection, to make repairs, or to exterminate.

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First published: May 2023
Spirollari v. Breukelen Owners Corp. and SMRC Mgmt LLC

An issue that is very common in co-ops and condos is the use of the handymen and other staff after hours by the shareholders and unit-owners. This litigation illustrates the danger when boards allow that. If there is an injury, might the board be held responsible? If there is damage caused during the job, who might be responsible? Is the super or the board still somehow supervising the work, even though they are not in the room? These are questions that one does not want to have to answer when disaster strikes. If a board allows its employees to work for residents after hours, a policy should be put in place and a waiver of liability signed by the shareholder or unit-owner, freeing the board from any responsibility. The resident should be made aware that the co-op or condo and its management are not responsible if anything goes wrong and that the burden of risk is shifted to the resident. Insurance issues should be reviewed by the board. And consultation with counsel is essential to make sure the board does not ignore or mishandle a very serious and sensitive issue.

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First published: Mar 2023
Access: How Much Are You Offering?

When sidewalk bridging (or other protection or scaffolding) must be installed on adjacent property, the property owners must negotiate an access agreement. But if the parties cannot agree on the terms of the agreement, the law permits the party needing access to bring a special proceeding under RPAPL §881, and the court will then decide what is reasonable. In light of the fact that no one can predict what a judge might do, it is best for both sides to be reasonable and to work hard towards an agreement that is fair to both parties. This is especially true when the value of property is easily ascertained, as was the case here, and where the monthly rent received was certainly a good indication of the value of the property per month.

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First published: Jan 2023
Tomfol Owners Corp. v Hernandez

It should be noted that although the eviction action in this case was unsuccessful, it was rejected for technical reasons. It’s extremely important to remember that eviction is an extreme and drastic remedy, and that every step required by the lease must be followed. Even today, some 20 years after the Pullman decision, lawyers are very careful when they attempt to evict a shareholder based upon objectionable behavior. Following every step outlined in the lease, and even going beyond the requirement to establish that there was no bad faith involved in the process, is essential to winning a Pullman eviction action.

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First published: Nov 2022
My Leaking Doors, Your Cost To Fix

This fact pattern is fairly common in cooperatives. A shareholder will undertake an alteration, and the alteration agreement with the cooperative 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, there is no agreement with the new shareholder in which he 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 decades). Unless the proprietary lease has precise language binding the shareholder, there is little to do. It should be noted that some cooperatives require a purchasing shareholder to sign an Assumption Agreement of the prior lease, as well as executing a brand new proprietary lease. Some Assumption Agreements include language which states that 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, but at this time the courts have not reviewed this issue.

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First published: Oct 2022
Brightwater Towers Condominium v. Vitebsky, Zilberman and Sosina

So what can a board do to prevent a handful of dissidents from spreading nasty and often anonymous statements insinuating that it is acting improperly? Communication is the key, since the number one complaint of dissidents is that the board is not communicating with shareholders or unit-owners. Quarterly newsletters are one way to keep residents abreast of the operations of the building and the decisions of the board. But the best way may actually have been provided by the pandemic — virtual meetings. The sniping by a few owners most likely have very little effect if all residents hear directly from the board, and often.

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First published: Jun 2022
Trump Village Section 4, Inc. v Vilensky

Although the issues of whether a co-op can sue when a prospective buyer makes misrepresentations on a purchase application have not been finally resolved — and courts will continue to hear motions in such cases — it is interesting that the trial court and then an appellate court allowed a cooperative to bring a fraud action in this case. It is not uncommon for an applicant to claim he will move in and instead install an adult child in the apartment or use it as an investment by subleasing the apartment. In the past, boards have had little recourse. Certainly the cooperative might bring an action that the shareholder has violated the lease, but after curing, the violations could continue. Still, the possibility of winning damages in a fraud claim makes it imperative to follow such disputes to their legal conclusion.

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