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Habitat Magazine Business of Management 2021

HABITAT

ARCHIVE ARTICLE

Injured and Angry: Who’s Responsible?

A worker falls from a scaffold in a boiler room. He’s injured, he’s angry, and he sues. He goes after the condo that contains the boiler room, the board that runs the property – and even the sponsor who still owns apartments in the building.

Who is responsible?

No one denied that Orfeusz M. Jerdonek was injured when he fell off a scaffold while working at the Hermitage Condominium, at 41 West 72nd Street in Manhattan. In fact, the court, in Jerdonek v. 41 West 72 LLC, went further than that, agreeing that Jerdonek should win a judgment against the board. Although it could have stopped there, the court continued, focusing on other issues.

Before we discuss the Hermitage decision, however, let’s turn to some condo basics. In a condominium, a person owns a particular apartment and a percentage of common interest in the common elements (the halls, the façade, the boiler room, the roof, and so on). This creates an inherent conflict. Each person has an ownership interest in, but no control of, the common areas. Under the governing documents, that control is left to the board. And the board owns nothing. It acts only on behalf of all unit-owners, not as an owner itself. Why is that important? Because at the time of the Hermitage suit, that meant there were several deed holders, not just one. If the sponsor could be sued after the property was converted to condominium ownership, it would follow that each individual owner could be sued because he or she owns a percentage interest in the common areas. Such a result, the court noted, would be “sharply at odds” with the expectations of condominium buyers. When you buy a condo, you believe that the risks and liabilities arising from the common elements will be handled by the elected board. You don’t expect to be sued for an accident in the common space.

This case is an important reaffirmation of many of the principles set forth in Pekelnaya v. Allyn, in which a plaintiff asserted that all unit-owners were responsible when a piece of fence fell off a building, injuring a passerby. The fence was controlled by the board and, therefore, the board was the responsible party, notwithstanding that the applicable statute placed liability on the “owner.” The court, in both of these cases, said that once a condominium is formed, no individual unit-owner has the authority to determine how a general common element, such as a hallway or boiler room, is to be maintained. Recognizing this important factor, the court drew a distinction between ownership and control. These decisions also highlight how important it is for a board to maintain sufficient insurance and take other steps to protect the unit-owners’ interests. One way in which unit-owners can address this issue is to question their board members and financial professionals at the annual meeting to determine whether the board has adequate insurance in place.

ATTORNEYS
For Jerdonek: The Perecman Firm
For the sponsor: Baxter, Smith & Shapiro

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