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It was supposed to be her night off. From work. From the board. From responsibility. But as Christine Stokes went to turn off her phone before a concert, she noticed several messages from residents in her building, and sensed that her night out was probably not going to happen. As the lights dimmed in the concert hall, she called the building manager of her home at 240 East Houston Street in Manhattan, a 17-unit condo complex where she is the board president. The agent gave her the bad news: the building was in flames. She contacted her husband, an actor playing in a nearby Broadway production, and they raced back to the scene on their bicycles.
Later, another board faced a similar crisis: a major fire broke out at about five o’clock one afternoon at Georgetown Mews, a sprawling 930-unit garden apartment complex spread out over 37 buildings on 58 acres of property in Kew Gardens, Queens. It was the second major fire the complex had dealt with in recent years, with four apartments completely burned out and 10 families affected by fire and residual damage. As a safety precaution, the main gas line was shut off at the time of the fire. Almost six weeks after the fire, Con Ed was still testing for leaks and some of the 34 families affected had not had gas restored.
“The fire was devastating,” recalls Mary Fischer, the longtime board president. “Even now, two months later, you can smell it.”
Fire is everyone’s worst nightmare. It can not only destroy property but also displace scores of people. How your board prepares for the aftermath of a fire is just as important as how your board copes with it.
First Step: Insurance
Before you even face a fire, you must prepare for the worst. That means making certain that everyone has insurance. Can boards require it? Certainly. For instance, 10 years ago, Georgetown Mews mandated a certain dollar amount (determined by its attorney) that all shareholders had to have. The board also required that Georgetown Mews be put on the policy as an additional insured, which was a very savvy move. “A lot of times, people will get the insurance policy the first year, as required, but then let it lapse,” Fischer notes. By being an additional insured, the co-op is notified if the shareholder lets that happen. “That way we’re covered.”
What can – and should – the basic coverage include? At a minimum, the building’s insurance should cover the damage to the property’s exterior, sometimes referred to as the “envelope,” and the common areas, and sometimes damage to the interior of a resident’s apartment (if, for instance, smoke or water affected walls and floors, or if either needs to be opened up to dry out sufficiently and prevent mold). A building’s insurance will pay for the restoration of what is commonly called “the vanilla box” of an apartment: a pristine and repaired unit to be handed back to the resident to decorate as he or she wants.
What the building’s insurance will not cover are improvements or “betterments” – alterations to an apartment done by the resident before the fire. The building will repair walls, for example, but not pay to replace pricey wall covering. If flooring needs to be opened to dry the subfloor, the building’s insurance will pay for new wood and the installation but not elaborate finishes. It might provide a new refrigerator or a sum equivalent to the cost of a basic model, but the resident and his or her homeowners’ insurance pay the balance for a higher-end model.
Homeowners’ insurance is designed to cover only the contents of an apartment that might be damaged or lost to the fire. If a resident has no homeowners’ insurance or not enough coverage, he or she is free to sue the person deemed responsible for the fire (in the case of Georgetown Mews, that would be the person in whose apartment the fire started). In which case, “they would need to hire a lawyer who specializes in this,” says Steve Greenbaum, director of property management at Mark Greenberg Real Estate.
If the coverage on collateral damage to an adjacent apartment was merely insufficient, which is not uncommon, it is up to the two insurance companies to duke it out in a process known as subrogation. Short of suing, that is the back and forth between insurers until a settlement is agreed upon.
The best homeowners’ policies cover temporary housing, as Stokes’ policy did. Her husband had the presence of mind to call their insurance company first to see how to proceed; as a result, they had a hotel to stay in within hours. If the building or another party is found to be liable for the fire, the resident’s insurance company will attempt to recover the payout for temporary housing from the responsible party.
After the Fire
The first call after 911 should be to an emergency restoration company, whose job it is to do damage control. These are the operations that come in to mitigate water and smoke damage. “Our basic task is to dry out the building because the longer you wait, the more damage it will do,” notes Barry Swidler, owner of American Fire Restoration, which responded to the fire at 240 East Houston Street. Pumping out quantities of water is only the first step; dehumidification and mold remediation follow, as does tending to fumes. “We had air movers there for weeks and weeks,” Swidler says. The bill for the services was roughly $250,000.
Removing debris or knowing when to preserve it is also part of a restoration company’s brief. According to Dennis Melandro, owner of Tri-State Restoration, which responded to the Queens blaze, rubble and broken glass must be cleared for safety, but everything needs to be sorted out to see if it is valuable and insurable. “If we can’t identify it, we don’t throw it out,” says Melandro. “We don’t want to throw out anything that could have caused the fire – the investigation part of the whole disaster is crucial.” Melandro adds that debris should be cleared to avoid injury, but that residents and management should take photos to document what might be useful down the line.
At Houston Street, unit-owners were allowed to make supervised visits to the apartments twice, once the very evening of the fire to collect things like medication, and a second time the day after to gather valuables and essentials that might be needed during the time the building is uninhabitable, which could be weeks or months. Damage to Stokes’ apartment was extensive.
Restoration companies will board up windows and replace and lock doors. In some cases, building management needs to hire security personnel to guard against theft or vandalism in a partially burned-out building. At 240 East Houston Street, Cooper Square Realty, the management firm, hired a 24-hour security detail made up of off-duty police officers, the cost of which was covered by insurance. “These were not minimum-wage security guards,” Tal Eyal, chief operating officer at Cooper Square, explains. “We paid more to protect the property, and residents were very appreciative.”
How long security is needed varies from case to case. If the fire is thought to be arson or deemed a crime scene of another sort, the property can be off-limits for weeks. Insurance will then cover loss of income from maintenance or common charges that displaced residents are not obligated to pay.
Immediately following a fire, you need to be sure the manager is on-site, helping displaced families gather what belongings they can. Although boards have no legal obligation to provide housing, many may see it as their moral obligation to assist the temporarily homeless and shell-shocked residents. Displaced residents pay no maintenance or common charges while they are out of their homes, and the co-op or condo’s insurance covers the loss of income. Residents and management should take photos to document what might be useful down the line, Melandro notes.
Working With Insurance
The next steps involve having the manager and/or a board member work with the co-op’s insurance adjuster – and with the different insurance companies retained by the shareholders or unit-owners. You may also want your manager to assist (though it is not required) residents in need. At Georgetown, property manager Robert D’Amico of Mark Greenberg Real Estate walked many confused shareholders through the basics of their policies.
Within days of a fire, insurance adjusters come to the site to begin to assess the damages. If the fire is relatively small, they work with the building management to agree on the claims. Larger fires like the one at 240 East Houston Street require the services of a public adjuster hired by the building or a unit-owner to advocate on behalf of the insured. The best of them are well versed in the cost of repairs and replacement and up to date on building law and code changes that may have to be addressed after a fire to bring a century-old building up to code.
There is a sort of ambulance-chasing culture among some of these public adjustors, many of whom head to fires as soon as they hear about them on the police scanners. But reputable ones have established relationships with management companies and are a big help in navigating the confusing waters of insurance claims. “My job is to get in there and settle the loss as quickly as possible but make sure I have found every dollar possible to be gained for the client,” says David Azus of Affiliated Adjustment Group. “It doesn’t have to be confrontational or adversarial.”
In fact, if you prepare properly, a tragedy doesn’t have to be the end of the road, either. As Stokes notes, it is a question of putting the crisis into perspective and coping. “We didn’t lose lives,” she says. “We have our challenging days. But we are moving forward.”