Who is obligated to cure violations inside a co-op or condo apartment? The answer comes as a surprise to many board members – even many managing agents – because they all think their corporate documents state that violations such as painting and plastering are the responsibility of the shareholder or unit-owner.
And they are – but not as far as the City of New York is concerned. There was a 1986 case called McMunn vs. Steppingstone that raised the question as to who is responsible in the first instance to make repairs. The shareholder who had paint and plastering violations in his apartment, or their co-op?
The court ruled that because the co-op is the owner of the property, the co-op is responsible for making the repairs and clearing the violations – even though the proprietary lease very clearly states that such repairs are the responsibility of the owner. But, the court continued, even though the co-op had to make the repairs, it is then able to bill back the cost of those repairs to the owner in the form of additional maintenance. So the co-op has the responsibility to make the repairs, and the shareholder has the responsibility to pay for them.
What does “financial responsibility” mean? It means that the co-op says to the shareholder, “Hey, you have these violations on your apartment. You are obligated to fix them. If you don’t, we will do it for you and bill it back to you as additional maintenance. And we’re going to be the ones to decide how the repairs are made. If you don’t want that to happen, then you need to step up and fulfill your contractual obligation and make those repairs.”
If the residents don’t act, the co-op or condo will step in and do the work and bill the shareholder or unit-owner, then add those charges onto the monthly statement as additional maintenance or common charges. If it’s not paid, the co-op shareholder will wind up in a nonpayment proceeding and the condo unit owner will have a lien on the property. And that’s how the board is going to recover the cost of those repairs.
Many boards are still surprised when they’re told they have to make these repairs. They say it’s clearly the shareholder’s responsibility under the lease. We tell them they’re 100 percent correct, but as far as the city’s Multiple Dwelling Law and the state’s Housing Maintenance Code are concerned, it’s the building owner who is responsible for making those repairs.
Most corporate documents provide for the pass-along of those costs, but you always have to check your documents and make sure you can recover these costs. But don’t delay making the repairs because if the statutory time period lapses and the repairs have not been made, you are subject to fines, penalties, even contempt penalties. And those costs probably cannot be passed back to the shareholder because they’re the board’s obligation. So if there are violations and the shareholder or unit-owner doesn’t make the repairs promptly, you should do them and bill back the cost.
Stewart Wurtzel is a partner at Tane Waterman & Wurtzel.