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Habitat Magazine Business of Management 2021

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ARCHIVE ARTICLE

Proportionate Shares Are Set in Stone

In every condominium association, the unit-owners all must pay their fair share of what’s known as common charges. How do you define common charges?

The condominium unit-owner is also a member of a condominium association, which does things like run the elevators and pay the doorman and the electric bill for the building and all of the other common expenses. Those common expenses are shared through something called common charges. Usually that share relates to the size of the apartment and where the apartment is located, so an apartment might be responsible for, say, 1.3% or 5% of the overall common expenses.

 

Who determines that percentage share?

The sponsor/developer is the one who usually assigns percentage interests because he’s the one who files the declaration of condominium. He’s called the declarant — the one who’s declaring this to be a condominium. The declarant sets the rules and regulations of the condominium as well as the percentage interests. Once those percentage interests are assigned by that document, they’re pretty much written in stone.

 

If that number is written in stone, why would there be a conflict?

Well, the problem is that sometimes condominium associations will spend money — properly — for something that benefits some of the unit-owners but not all of them. Remember, every unit-owner is required to pay his or her proportionate share of the common expenses, and the only exception would be in the actual documents. An exception might say that a commercial unit-owner who has the ground-floor store or restaurant is not responsible for the water bill for the rest of the building if he has his own water meter. Unless there’s that exception, the unit-owners pay their proportionate share in each and every case.

 

In a recent case, in a condominium on Baxter Street in Chinatown, the unit-owner who owned the commercial space, which is ground-floor stores and restaurants, did not want to pay its proportionate share of $150,000 capital improvements to things like terraces, the roof and other portions of the building that didn’t really affect the commercial unit-owner.

 

So if I live on the ground floor of an elevator building and the board redoes the elevator, even though I don’t use the elevator, I’m responsible for my common percentage share of that elevator job?

That’s absolutely correct — unless there’s an exception in the declaration or the bylaws. Which is why it’s very important for unit-owners who are purchasing into a building to have their attorney review the governing documents. They’re available online through something called ACRIS. So long as you own the apartment you’re responsible for your proportionate share of the expenses even if some of those expenses relate to things that you might not use, like the elevator.

 

What happened with the lawsuit at the Baxter Street condominium?

The condo board filed liens for unpaid common charges against those commercial units and commenced foreclosure actions. The judge — properly, in my opinion — said if you look at the documents for this condominium, there is no exception that says that the ground-floor commercial unit-owner doesn’t have to pay, even if the assessment is for terraces on the sixth floor.

 

Is it possible to add or delete exceptions from governing documents?

Amending the declaration is not easy. It usually requires more than two-thirds of the unit-owners to vote in favor of it, and then it has to be recorded with the city registrar. Unless that happens, those rules and regulations and percentage interests in the condominium declaration and bylaws are pretty much set. 

 

The condo board prevailed in the Baxter Street case. What is the teaching moment here?

One lesson for sure is: Check the governing documents so you know what you’re getting into before you purchase an apartment. Common charges are spread out among the unit-owners as a way to pay for running the building because it’s much more efficient to do it that way than for everyone to have their own heating system or their own water system. You’re going to pay your proportionate share. That’s part and parcel of living in a condominium.

 

FROM THE COURTS 

APRIL 13, 2021

 

Hyman v. Able & Ready Appliance Repair Corp., 2021 NY Slip Op 2247

(N.Y. App. Div. 2021)

Plaintiff’s contention that she should be entitled to withhold the payment of common charges during the pendency of the action based on a purported violation of the warranty of habitability, is unpersuasive. The statutory warranty of habitability prescribed by Real Property Law § 235-b does not extend to condominium unit-owners.

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