The Engineer’s Contract:
Doing It Right
For most New York co-op and condo boards, periodic Local Law 11 façade repairs are a fact of life right up there with stiff January heating bills and rising real-estate taxes. When it comes time to perform those required external repairs – or any other repairs that seem necessary or prudent – boards will need an architect or an engineer, sometimes both, to guide them.
Trouble can arise, for instance, when there’s a dispute over a bill in mid-project. A disgruntled engineer can withdraw from the job, effectively shutting it down since Local Law 11 requires that an engineer or architect be attached to the project at all times to inspect work and file reports. When the engineer walks, the board is left to pay for unused scaffolding until a new engineer is hired.
Jeff Heidings, president of Siren Management, which manages about 40 properties in the city, suggests that boards take a simple precaution against this sword of Damocles. “The protection I would advise for all boards,” he says, “is a stipulation that if there’s a disputed bill, the engineer agrees not to withdraw from the job but will settle that bill once the job is complete.” Heidings suggests that the parties agree on a “down payment” of about 50 percent on disputed bills, with the remainder to be negotiated once the work is complete.
There are other ways boards can make costly blunders when hiring an engineer. Since most engineers charge anywhere from $150 to $350 an hour, it’s vital that boards establish how much of the engineer’s time they’re able and willing to pay for.
“You should have a pre-project meeting to discuss the scope of the job,” Heidings says. “Staffing and field work are the big variables. You want to know who the company is going to assign, and what the engineer’s level of experience [and therefore pay] is. And the property manager has to be astute enough to question how often the engineer plans to inspect the contractor’s work.”
Then there is the issue of periodic reports prepared by the engineer. “You should also prescribe what kind of reporting you want and how extensive you want them to make it,” Heidings says. “They’re billing by the hour, so that reporting can become extremely expensive.”
Stephen Varone, president of Rand Engineering & Architecture, suggests that the first step a board should take when preparing to hire an engineer is to put their needs down in writing. “It’s nice when they give you a written request for a proposal,” says Varone. “It doesn’t need to be a long thing. It should explain their situation and what they hope to accomplish. That way, they’re much more likely to get apples-and-apples bids from contractors. The larger the job, the more detail you need.”
When boards contact Rand and describe their needs orally, Varone says, it’s much trickier. “Then it’s a lot about hearing what the client is asking for,” he says. “There’s a lot of reading between the lines.”
Once the scope of the project is established – either by written or oral communication – Varone agrees with Heidings that every board should spell out in the contract how often the engineer will visit the site and what the cost of those visits and ensuing reports will be. The cost can vary widely. A relatively inexperienced engineer might bill $150 an hour, while a seasoned principal in a firm might charge as much as $350. Sometimes a job will be best served by several engineers with varying degrees of experience. This should be spelled out before work begins.
“Some contracts are very vague,” Varone says. “They say, ‘The engineer will visit the site as needed and bill for his time.’ To me, the worst contracts are when the engineer has a fixed fee or a fee that’s a percentage of the construction costs. The contract should spell out how often the engineer is going to visit the site. Usually, every time we visit the site we send a report, including photos and narrative, to the board contact, the property manager, and the contractor.”
This “board contact” is critical. A designated board liaison can keep the job streamlined while ensuring that the entire board is informed of the job’s progress. “I always prefer to have both the board and the property manager involved,” Varone says. “I like to have a board member involved at all times. The only way to confirm that the entire board is happy is to keep someone from the board in the loop. The same applies to the property manager.”
On the issue of disputed bills, Varone notes: “Normally, we have a 45-day clause. If a bill is not paid within 45 days, we stop work. We’ll continue working if there’s a reasonable dispute. We give notice before we stop work, and they have every right to respond.”
The board at a small Manhattan co-op has learned from experience just how crucial the engineer can be to the success – or failure – of a capital-improvement project. Faced with masonry and brick-repointing work several years ago, the board hired an engineer, who inspected the building, made recommendations and solicited bids from three contractors. The engineer arranged for the prospective contractors to visit the building, and their bids were in line with the engineer’s projections. The job was done to the board’s satisfaction.
Then, faced with additional masonry repairs, the board hired a different engineer. The job started with promise but soon went off the rails. “The engineer did something right, soliciting three bids,” says the board’s treasurer, speaking on condition of anonymity because the board and engineer have not yet resolved their financial dispute. “But then things started to change. Only one contractor came to look at the building, and the bids were way higher than the engineer’s estimate. That’s the engineer’s fault. He failed to give realistic estimates and he failed to schedule on-site visits. We trusted that someone’s going to be realistic. I don’t know how to put that into a contract. You should demand that the contractors visit the building before they make bids. You might think that’s common sense, but apparently there are people who think differently. So you’ve got to spell it out.”
The board has decided to hire a different engineering firm. “I think the engineer got busy,” the board treasurer says. “We’re a small building and obviously we weren’t a high priority. It’s no reflection on the contractors.”
This board’s experience illustrates one of the most important considerations when hiring an engineer – find the right company for the job. A big firm might not be right for a small building, and vice versa. And one that excels at roof work might not have similar expertise with elevators or historical detailing. Some homework and research are required.
“This field of building repair and restoration is all about real-world job experience,” says Varone. “Don’t use the same engineer just because you used him before and he did a good job. You need to find which firm is specifically geared for the job you’re doing.”
Construction and the Residents:
The construction schedule left no room for delay – no time for residents who refused to open their doors when the work needed to be done. Contractors had to get into every one of the 1,021 cooperative apartments at Le Havre, a self-managed property in Queens, several times. First, they needed to tape plastic over the windows, both inside and out, before tearing the fronts off 32 buildings and replacing them. Then they had to enter the apartments again to rip out and replace the old windows.
“One or two shareholders objected to us coming into their homes,” says Stanley Greenberg, treasurer of the co-op board. “We talked to them, sent a few letters. It always gets resolved.”
It’s possible for a board or its representatives to gain entrance to almost any cooperative or condominium apartment – for a valid reason. Nearly every property has rules and bylaws that require residents to open up their homes in case of emergency, or to allow necessary work. A few properties even allow access for random inspections to ensure that house rules are being followed. Residents who refuse can be taken to court and even forced to pay the resulting legal fees. But the process takes time, and you need to prepare properly.
Without decisive action, co-op boards can be shut out of apartments for years. In one recent example, a shareholder complained of leaks and “toxic mold” in his apartment but then refused to allow workers in to fix the problem. After years of unanswered letters from management, the case ended up in court and the shareholder was quickly required to open his doors.
The first step to get into an apartment is to check the exact language of the rules that govern the property, including the house rules, the condo or co-op offering plan, or the bylaws of the property. If the building is a co-op, also check the terms of the proprietary lease. The standard offering plan says that the co-op board or the management company can enter an apartment for “an appropriate purpose,” such as handling an emergency.
If a building is in danger of sudden catastrophic damage – for example, from a massive leak or an overflowing bathtub – property managers who have no other means to enter the unit can also legally break the locks and enter an apartment, at the resident’s expense, experts say.
At some co-op properties, the proprietary leases are written to allow property managers the right to demand entrance to randomly selected cooperative apartments to make sure that residents are following the rules, such as covering the floors with carpets.
The most simply solved access problems are those that arise in emergencies. If there is reason to believe that a person’s life is in danger behind a locked door, and if the building managers don’t instantly provide the keys, then the police or the fire department are likely to drill the lock or smash the door open themselves.
The only ambiguity is whether a particular situation qualifies as an emergency. Some management companies have exaggerated or made up potential emergencies, such as a potential gas leak, as a pretext to enter an apartment for other, less urgent reasons. Here’s a useful rule of thumb: if a situation has already existed for weeks or months, it probably isn’t an emergency. Property managers who claim an emergency should be prepared to justify their claim if first responders such as firefighters enter the apartment and don’t find anything. Faking an emergency is against the law.
New York State law requires that residents provide a key to management in case of emergency. Without a key, a steel door and a dead-bolt lock can prove surprisingly resistant to drills and pry bars, costing emergency workers time.
However, not all property managers press residents to turn over keys. Residents often fear keys may be stolen if they aren’t watched day and night – for example, if they’re left in a super’s workshop.
“If it’s a doorman building, we press for the keys,” says Steven Hirsch, director of management for Goodstein Management. “There’s someone to watch the keys all the time.” In buildings without a 24-hour doorman, Goodstein instead gathers emergency contact numbers for resident cell phones and relatives in case of an emergency.
Property managers determined to gather keys should send a letter to residents and follow up. If a resident refuses to surrender the keys, managers should have the lawyer representing the property send a letter to the resident that clearly explains their responsibilities.
If threats don’t work, management can take the resident to court, which will almost certainly issue a court order requiring the resident to provide a key. In most cases the decision is issued within two months, experts say. The loser is also required to pay the court costs for both sides in the case, which could add up to thousands of dollars.