That's because the court faced an issue it had not previously addressed: whether the warranty of habitability in the New York State statute, at Section 235(b) of the New York real property law, applied to tenant-shareholders in a cooperative apartment building.

The court noted that co-op proprietary leases should not be distinguished from other types of leases, citing Jimerson Housing v. Butler, which stated that the relationship between a cooperative and a stockholder (i.e. shareholder) "is that of landlord and tenant …." The court also referenced Hauptman v. 222 East 80 Street Corp., which found "[t]here is nothing here which indicates an intention by the Legislature to exempt cooperatives from" the warranty of habitability.

So, the court in Suarez v. Rivercross Tenants Corp. ruled that "[a] proprietary lessee is entitled to the statutory protection…. While there is thus created the anomalous situation that one who is essentially an owner (by virtue of his purchase of shares) is in a sense suing himself, the situation is not vastly different from any stockholder who has occasion to sue the corporation of which he is a pro rata owner by purchase of stock."

However, the court denied Suarez's request for an immediate, summary judgment against the co-op, since there existed questions of fact to be determined. The court stated, quoting Park West Mgt. v. Mitchell, that "[t]he co-op is no absolute insurer of services which do not affect habitability nor is it a guarantor of 'every amenity customarily rendered in the landlord-tenant relationship.'"

Significantly, the court noted, "while it is not indisputable that health and safety are adversely affected by insufficient heat, not every such deprivation will constitute a breach of the warranty [of habitability]." A decision as to whether a breach occurred is based on many factors, including the extent, the effect on health and any corrective measures taken by the co-op.

A shareholder may claim damages for a breach and/or withhold maintenance payments during the period in which it occurs. In Mastrangelo v. Five Riverside Corp., the amount of damages was calculated as the difference between the shareholder's regular maintenance and the rental value of the premises during the breach of the warranty of habitability.

Your Primary Residence

The warranty cannot be asserted by a shareholder who does not occupy the unit. Therefore, if the tenant-shareholder sublet it, he or she cannot later assert a breach.

The courts have held that a subtenant also has no cause of action in such cases, because the subtenant does not have a contractual or landlord-tenant relationship with the cooperative corporation. A landlord-tenant relationship, however, exists between the tenant-shareholder and the subtenant, who would have a cause of action against the shareholder. The shareholder may then cross-claim against the cooperative.

Some general points: The multiple dwelling law (MDL) and the New York City housing maintenance code (HMC) require cooperative corporations to maintain the premises in good repair. For example, the co-op is generally responsible for repairing interior walls and ceilings in apartments. While proprietary leases generally require shareholders to paint, maintain and repair their apartment interiors, the MDL and HMC may require the co-op, as owner, to correct a condition inside the apartment. The co-op may thereafter charge the shareholder for the cost of doing that as additional rent under the terms of the proprietary lease.

In addition, the managing agent should promptly advise the board of any claims by you. The agent should evaluate the complaint and, if necessary, obtain a report from the building's architect or engineer. In many instances, a failure or delay in responding allows you to file complaints with government agencies.

Note: No such relationship exists in condominiums between the unit-owners and the board of managers. Since condo unit-owners do not lease their units, they are not considered tenant-shareholders and cannot assert a breach of the warranty of habitability or withhold their common charges or assessments. However, the courts have held that condominium boards must still repair common areas, even though the warranty of habitability is not applicable to them. If a unit-owner leases the owner's unit, then a landlord-tenant relationship would exist between the owner and the subtenant, who may assert the warranty of habitability against the unit-owner.

Attorney Dennis H. Greenstein is a partner at Seyfarth Shaw.

Adapted from Habitat February 2005. For the complete article and more, join our Archive >>