Imagine a three-bedroom apartment in a condominium that’s been newly created from a two-bedroom unit, taking up the same space but with gleaming new floors, a state-of-the-art kitchen, improved lighting, and enough new electrical outlets to satisfy the most high-tech home. Yet the apartment-owner pays less in common charges than the owner of an older, non-renovated three-bedroom in the same building.
Can that possibly be right or fair? That’s the question posed by a condo owner in a 55-unit building on “Board Talk.” And what happens if those renovations occurred without board approval, either because the board was uncaring or simply unknowing?
“I have [repeatedly] complained to the board that unit-owners were not in compliance with bylaws, which state no construction without board approval,” the unit-owner writes. “I complained that they did not have building permits … and may have created a safety concern. One of my biggest complaints was that these improved units are much larger and more modern than mine and [pay one-fourth] of the monthly [common charges]…I have letters going back 10 years, but the problem is there are so many owners who have done illegal improvements I can’t get support.” Additionally, the writer charges: “The board will not allow me on the board.”
In response to this plea for help, some Board Talk participants have suggested the unit-owner with the complaint should:
• try to meet with the board to have the common charges adjusted
• call the Attorney General’s office if that’s refused
• contact the Department of Buildings about the renovations (which would presumably end up as a fine)
• offer the board assistance by serving on a “special board committee” to evaluate the situation
But what it comes down to are four questions. Is the board being fair? Is it following the law? Is it watching out for the building’s safety or being negligent? And why is it not allowing him on the board?
According to veteran manager Steven W. Birbach, president and CEO of Vanderbilt Property Management, there is nothing untoward about owners of renovated apartments paying lower common charges if those are based on a “percentage of [the] common elements” – essentially, a unit’s square footage.
If a two-bedroom was made into a three-bedroom by walling in a windowed area, with no change to the square footage, “the monthly charges [should] never change,” Birbach says. “They [would] have the same space. It’s not [like a] a rental apartment where if you fix it up you get more rent. The applicable amount of common interest does not change whether you renovate or not.” A same-sized co-op or condo apartment “may be worth more, but that doesn’t change the amount of maintenance or common charges.”
But the aggrieved unit-owner says the renovated apartments are “much larger” than his. If someone who renovated increased the apartment’s size or bought common elements – if he were taking over rooftop space or the board was selling him basement space to make a duplex – “you have to adjust the common charges,” he notes.
More problematically, this board is allegedly looking the other way when it comes to ensuring that contractors are licensed and insured and that renovations are safe and allowable. Typically, a board has the shareholder or unit-owner fill out an alteration agreement and supply the board with documentation for the board to approve.
“In the buildings we manage, it’s my job to make sure that licensed, properly insured people are doing the work,” Birbach confirms. “If, God forbid, something happens to a contractor – he falls off a ladder – and he doesn’t have insurance or worker’s compensation, he’s going to sue, and it becomes a whole problem. You want to know if they’re moving load-bearing walls, so that you can bring in an engineer, at the owner’s expense, to make sure it’s safe. Management has to make sure the application process is complete and that it’s sent out to the board for approval.”
From the way the unit-owner in question describes the apparent lack of alteration agreements, the board may not be following practices “that are the norm in our industry,” Birbach says. What recourse does this unit-owner have? “One could call the Department of Buildings or 311 to report a renovation that may require a building permit. However,” he notes, “many renovations don’t require permits, [like] replacing the cabinets.”
For long-term change, Birbach suggests owners with such issues should work to replace negligent board members or, alternatively, to hire outside counsel to compel alteration agreements. But what if the board won’t allow this person to serve?
Birbach is blunt. “The board may not want him on the board but any unit-owner in good standing absolutely has a right to [run for] the board. Whether that person gets enough votes is another story.”