LEGAL/FINANCIAL

The effectiveness of biannual meetings depends on how well the board understands their purpose: discussing, not deciding. Although such get-togethers are for informational purposes only — the residents are not there to decide on anything, just to learn — it does give them an opportunity to ask questions.

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In this week's Ask Real Estate column in The New York Times, Ronda Kaysen fields a question about mortgages: "Just before I went into contract on a condo, my bank denied my mortgage, citing 'investor concentration.'" Kaysen explains that while it's perfectly legal for someone to purchase several apartments in the same condominium, the problem lies with the banks. "In general," she says, "lenders will not give someone a mortgage in a building where one investor owns more than 10 percent of the apartments or where more than half the apartments are owned by various investors." We've talked about this problem before. For starters, too many investors tends to mean lots of rentals — and neither Fannie Mae nor Freddie Mac like that. There's also the very real concern that an investor who owns many apartments may default on his or her mortgage or stop paying the common charges. That's what happened at one Bronx co-op that found itself on the brink of extinction twice. Follow their story in the next few weeks.

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Last week, we examined the first thing you should do if, following a gas leak, Con Edison shuts off your co-op or condo's gas. Next comes the hard part: addressing the damage and fixing it. Seems simple enough, right? There's a ruptured pipe, so replace it. Except that sometimes the fix isn't that simple. And that's when things can start getting really, really expensive. 

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Ah, Brooklyn. Every quarter, it seems to get more prohibitively expensive. Remember the first quarter results? To refresh your memory, Brooklyn was still not as expensive as Manhattan, but the price difference between the two was starting to shrink. Now, according to Douglas Elliman's third-quarter report, it looks like Brooklyn is narrowing the gap even more. Jonathan Miller, the author of the report, confirmed to Brickunderground that "he doesn't expect Brooklyn sales prices to surpass Manhattan anytime soon, but the gap is, indeed, getting smaller. The difference between median Manhattan and Brooklyn prices during the third quarter of 2008 was $418,000; now it's $321,000." Inventory has declined by 13.6 percent — couple weak inventory with strong sales and you have a recipe that results in rising prices, explains Miller. It's no wonder Brooklyn is still breaking records. So what does it all mean? Well, if you're in the market for a co-op or condo in Brooklyn — and you can afford it — now's the time to move, because prices are only going to continue to climb.

Photo credit: Postdlf for English language Wikipedia, licensed under CC BY-SA 3.0 via Wikimedia Commons.

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Does the board have the right to use a unit-owner's terrace to make repairs to the building? Probably. Does that right continue even if delays keep a unit-owner from using the terrace after the end-date agreed to by the board? Again, probably.

In Natalie and Geoffrey Richstone v. the Board of Managers of Leighton House Condominium, the court looked to the condominium's declaration and bylaws to decide not just whether the board had the right to use the terrace, but also whether the unit-owners had to remove their wooden installations. 

Natalie and Geoffrey Richstone own apartment PH-2B at 360 East 88th Street, known as the Leighton House Condominium. The board wanted access to the apartment and the adjoining wooden terrace (the Richstones had exclusive access) to install rigging equipment to perform water tests and repairs. Although the court decision does not offer much pre-litigation background, the Richstones granted access until March 31, 2014. The rigging, however, remained in place after that date. The Richstones sued the condominium, claiming breach of contract, trespass, and nuisance and demanded that the condominium pay $10,000 per month for its use of the terrace. For its part, the condominium board counterclaimed, demanding that the court order the Richstones to remove the wood terrace. There were a series of motions by both sides (and two decisions by the court) — basically, each side wanted the court to award relief based on their claims and arguments.

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It was a few years ago — when Michael Williams was board president at the 190-unit co-op on Wallace Avenue in The Bronx — that he got "the call."

It was from a vice president at Marine Midland Bank, the holder of the building's underlying mortgage. The banker had grim news: he reported that "the sponsor was not paying the mortgage and the building was in trouble." For Williams and the rest of the board, it was "a wake-up call." Indeed: if the building defaulted on its mortgage and went into foreclosure, shareholders could end up losing their only assets and still be responsible for their personal mortgages. It would be, in the words of a veteran real estate lawyer, "the worst of all possible worlds." As one distraught shareholder at the co-op put it: "You don't want to lose your investment, your future, your children's future."

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Speaking of Tribeca, check out 5 Franklin Place. Work there is finally reaching the end, reports YIMBY. But it's what's on the inside that counts, and despite the outside showing "the cladding and window installation are complete, interior work appears to be ongoing." It shouldn't be long, however, for this 20-story building with 53 condominiums to be finalized. Wonder what the ticket price will be.

Photo of 5 Franklin Place by Tectonic

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It sounds like one of those Internet "clickbait" headlines, doesn't it? Except in this case that headline is pretty accurate. In a sampling of banks large and small, Chase, Citibank, and TD Bank all refused to comment about this "foreclosure trick." What are they going to say? "Congratulations! You got us! Condo boards really can foreclose on apartments in arrears faster than we can, and thus gain leverage over us."

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Okay, so a discussion about balancing budgets may not win any Most Exciting Topic awards, but knowing how to do it can translate to good financial health for your co-op or condo building.

I Was Told There Would Be No Math

Hey, being on a board can't be all glitz and glamour! You're going to have to crunch some numbers. But don't worry! We're here to help break it down for you. So, first things first: a good budget covers the building's annual income and expenses and attempts to maintain a strong reserve fund for future capital projects. And you'll need to differentiate between "operating" and "non-operating." 

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It's always been about a race to top in New York, hasn't it? When the Chrysler Building was being constructed, William Van Alen — the architect who designed it — was in a race against H. Craig Severance's building at 40 Wall Street. After Severance increased the height of his building and gave it the title of the world's tallest building, Van Alen got the green light for the Chrysler's telltale 125-foot-long spire. It beat 40 Wall Street as the tallest building in the world (not to mention the Eiffel Tower as the tallest structure). But the first man-made structure to stand taller than 1,000 feet would hold the title for only 11 months, because then rose the Empire State Building, and then… You get the picture. Fast-forward to the present, and not surprisingly, it's still a race to the top. Who will dominate New York City's iconic skyline? Lately, it's the residential giants — the luxury condo towers, such as the ones on Billionaires Row. The Real Deal sized up the "supertalls" recently: "At 1,396 feet high, 432 Park overtook Extell Development's 1,004-foot-tall One57 earlier this year. But Extell is now on track to reclaim the title. Extell's latest "supertall" building, dubbed Central Park Tower, is scheduled to top out at 1,550 feet in 2019. What's more, the tower will reportedly have a record $4.4 billion sellout." But, asks TRD, can that race really continue? Is it feasible (or wise) for these tall, skinny towers to keep rising all over the city? Maybe there will be a slowdown, but as long as there's a way, we bet developers will keep trying to reach higher.

"Chrysler Building at night" by David Shankbone. Licensed under CC BY-SA 3.0 via Wikimedia Commons

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