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Ambiguity is the enemy.
AUTHORMichael W. Freudenberg
PAGE #p. 12
Litigation in co-ops tends to happen in the gray areas of the proprietary lease.
What is the responsibility of the lessor – the cooperative or condominium – and what is the responsibility of the lessee – the shareholder or the unit-owner?
In your standard proprietary lease, the “lessor repairs” section is typically found in Paragraph 2, and it’s a very general section stating that the lessor is responsible for keeping the building in good repair. That includes the common areas of a building, outside of the four walls of a particular apartment, as well as any building system that serves more than one apartment.
Being very specific in your governing documents is critical. Not being specific becomes a problem when there are gray areas. That’s where we tend to find the litigation occurring. All boards should take steps to minimize the likelihood of costly and otherwise unnecessary litigation.
In a proprietary lease, the other section that goes hand in hand with Paragraph 2 is Paragraph 18, which is the lessee’s or the shareholder’s repairs section, and that’s important, because it specifically lists repairs that are the responsibility of the shareholder or the unit-owner. And those typically include anything that you can see from the plaster on the walls inward, and from the floor all the way up to the ceiling. There are exceptions to this general rule, and some gray areas. One exception is electricity; electrical wires are typically the responsibility of the lessor until they meet the circuit breaker box. From there in, even though you can’t see them, the electrical wires will be the responsibility of the shareholder or unit-owner.
The intersection of a wall and a piece of equipment is a frequently reported area of conflict, including plumbing risers and valves, air conditioning equipment, and windows. The care and upkeep of terraces and roof decks can be very contentious, as well, so a board should be aware what its governing documents say on the subject. We have found that, in general, proprietary leases in coops or bylaws in the case of condos do not specifically discuss what happens if a terrace leaks, causes damage to an apartment below it, or needs to be replaced.
It is critical for boards to update their governing documents in this area to avoid ambiguities that will inevitably result in conflict. In the case of the terraces, one problem I’ve found is that when they need to be replaced, or there are repairs needed, all of the owners have to share the cost of the work, and that can be a sore subject. This issue can come up when there needs to be a special assessment to fix balconies. If you have someone who has a studio apartment or a one-bedroom that doesn’t have a roof deck or a terrace, and they have to pay for the penthouse terrace that costs a million dollars – well, they’re not going to be happy.
We recommend that the proprietary lease or bylaws be updated to specifically state that the owner who enjoys a roof terrace or a balcony is responsible not only for keeping it clear of ice, snow, and debris but also for making repairs, keeping it in good condition, and preventing it from leaking. This will lessen the likelihood that the resident of an apartment who doesn’t have a terrace will become a disgruntled and litigious owner.