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Fancy amenities in a co-op or condo can come with unintentional consequences.
AUTHORJoel Miller, Miller & Miller
Co-ops and condos are going a little crazy these days with fancy amenities, like wine cellars, golf simulators and even pet spas. But some of them come with unintentional consequences, right?
I work with a 152-unit building in Queens, and the board decided that it would be a convenience to shareholders to install an ATM machine in a common area. They had an alcove across from the laundry room, which was in a corridor on the way to the garage. The treasurer talked to different companies and recommended to the board one that would give the co-op 75 cents a transaction. They sent over a contract, and the board asked me to take a quick look at it.
What did you find?
At least a dozen things that I thought were bad. They wanted us to provide a secure room to count the money, the right to put in additional ATM’s with neon lights anywhere they wanted on the property, and for us to indemnify them against any and all claims anybody made against them. I also found it interesting that they wanted to charge users $2 a transaction, a fee they could raise as they saw fit, but the amount the co-op got would stay the same. To top it off, the contract would renew automatically every year unless we gave them a 60-day notice not to.
In other words, not a good deal.
It was a terrible contract. I asked the board to let me make revisions, give it back to the company and see what they’d say. I did, and the next thing I knew, they signed, no questions asked. That said, the co-op makes so little money that the company only pays us every three months.
But didn’t the board really see this as a service for shareholders as opposed to a moneymaker?
I think they wanted to make a few bucks from this empty space and thought that maybe it would be good for shareholders. Now the ATM is there, and they’re pushing it as an amenity, but I don’t believe it’s going to get a whole lot of use. Also, it’s going to take them three or four years to recoup what they had to pay in legal fees.
What’s the lesson here?
If someone gives you a lease contract and tells you it’s a standard form, don’t take their word for it. Whether it’s for an ATM, laundry room or cellphone towers on the roof, have a lawyer – ideally, someone who specializes in reading contracts – look it over, ask questions and make changes if needed. This is something that people overlook all the time, but you can’t be too careful.