With co-ops, one of the most important documents is the proprietary lease. It outlines the relationship between the co-op as a landlord and the shareholder as the tenant or the lessee. Most buildings in New York City were converted back in the 1980s, and that’s when the proprietary leases were written. It still amazes me how many co-op boards have not updated their proprietary leases because they’re about 40 years old and very outdated. And a lot of he language just does not apply or address the various issues that come up in today's world.
I was involved in a litigation where I represented a shareholder, not the co-op. My client bought her apartment maybe four years ago, a very beautiful apartment with an existing greenhouse. Her apartment had a terrace, but a previous owner built out on the terrace and put in a greenhouse to extend the living room area. So there was still part of a terrace that wrapped around her apartment, but the issue became this greenhouse.
Several other shareholders had done the same thing in the units above hers. Apparently there was water leaking from greenhouses above hers, down onto her greenhouse, infiltrating her glass, and coming into her living room, damaging her furniture. Also, water was cascading onto her terrace area, ruining the furniture out there, and then dripping down onto the street. In fact, during the winter, icicles would form on her terrace because of what was going on upstairs.
There was a concern about icicles falling to the street and injuring a pedestrian. This shareholder came to me, and I reviewed the proprietary lease, which was from the 1980s and had your typical language about balconies, terraces, and penthouses. All it said was that the lessee shall keep the terrace, balcony, or portion of the roof appurtenant to the apartment clean and free from snow, ice, leaves, and other debris, and shall maintain all screens and drain boxes in good condition. Nothing about repairs. Nothing about who’s responsible for leaks.
It was our position that in a co-op the shareholder is usually responsible for everything within the apartment and the co-op is responsible for the exterior. So we sued the co-op, saying, “You have to take care of the terraces above us. Fix whatever needs to be fixed so this water does not leak down anymore onto our client’s terrace or greenhouse.”
The litigation went on for quite some time, and we ended up settling the case. The co-op and the two shareholders above my client’s apartment ended up contributing to a fund to take care of the repairs and put up the scaffolding. My client had the work done on her terrace and greenhouse, and she didn’t have to pay anything. It took a long time to get to that point because there was really no direction in the proprietary lease as to who would be responsible.
When a board comes to us and says it wants to update its governing documents, we will do a site visit. In addition to seeing if there are balconies or terraces or apartments that have use of the roof, we’ll check whether there are apartments with fireplaces. That enables us to tailor language in the amended documents to say who is responsible for what. Then, when a problem arises, you don’t have to spend two or three years in litigation trying to sort it out.