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Alteration agreements aren’t the only things that you need before construction.
AUTHORGeoffrey R. Mazel, Partner, Hankin & Mazel
PAGE #pp. 26-27
Boards should always ensure that all necessary permits are in place before alterations begin.
Although they had signed an alteration agreement, the shareholders at a co-op I handled started work before the permits came in. A neighbor who heard all the banging and noise called 311, the city sent inspectors in, and the next thing you know, there were violations being issued against the corporation. Because the corporation is the owner of the building, the city believes the co-op is liable for the fines that are associated with it and must correct them.
My advice to the boards is to let your shareholders know that it’s not only the board that needs a permit for renovations, the shareholders need the permit too, because they’re ultimately responsible.
The corporation got the summonses, and went down to the Environmental Control Board, which is the tribunal wing of various city agencies. The corporation got fined a certain amount and agreed to pay that, even though it was the shareholder’s fault.
The lesson here is that the board has to be careful at several levels. The first level is when you make any alteration agreement, make sure it’s clear in the agreement that permits are required before any work can commence. Most well-written alteration agreements will have that in there. The second level is to make sure the shareholder knows and understands the importance of the permits. Do not let contractors into your building until you’re sure that they have procured permits. There are two ways to find that out. The contractor can give you a copy of a permit, or you can simply go online, look up your address on the DOB website, and see that a permit has been issued for the work in your apartment.
Any fines will be paid by the corporation. The fines will be passed on to the shareholder, along with the legal fees, the administrative fees, and the soft cost involved in hiring an expediter and an engineer to review the plans. The shareholder is going to be left holding a rather large bag. Boards have to be aware of the importance of the alteration agreement because it concerns quality of life, personal-injury liability, and property damage.