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Garages - Concerned Feb 18, 2017

My co-op has limited on-premises parking consisting of garages and parking spaces. As such there is a waiting list for shareholders seeking on-premises parking. A board member maintains a garage for storage purposes only which is in violation of the House Rules. The board member is aware that he is in violation yet refuses to relinquish his garage claiming that as a shareholder he has a right to the garage. Can the Board & Managing Agent force the board member, or any shareholder, to relinquish the garage? Additionally, can a fine be assessed the the board member for each month he is in violation of the house rule?>

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House Rules - Fines - Concerned Feb 18, 2017

Our co-op, located in Nassau County, recently revised the House Rules providing a categorically aligned table of contents and indicating fines for each violation. The board relied on house rules from other co-ops located in Nassau County along with input from the managing agent and co-op attorney to ensure compliance with the proprietary lease and any other regulations effecting the co-op. We have recently learned that courts have ruled in favor of shareholders when fines for house rule violations have been assessed. Can you discuss this issue?

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I'm NOT an attorney, so I'm not completely fluent in the law and court decisions.
However, as a board member for many years, what I have heard from other board members, managing agents, etc. is that you can charge fines but that most courts will throw them out if it gets that far. Unless there is a financial harm to the coop, such as receiving tickets for failure to recycle, building dept. violations for improperly installed a/c's or items blocking exits or on fire escapes, etc. you're not likely to collect any fines levied. Will a shareholder take you to court? Depends on the person and how much $$ is involved. And then you wind up with your own legal fees, which you can also try to pass on to them....

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Homeowner Insurance - Frustrated Homeowner Feb 16, 2017

My Co-Op, the largest In NYC, recently past a regulation requiring homeowner insurance with minimum dwelling coverage of $25,000 and personal liability coverage of $300,000. Noncompliance of this regulation will result in a $25 a monthly fine for every month without insurance.

The Co-Op claims that the Master Insurance Policy covers build out up to the interior walls, stock kitchen cabinets and bathroom fixtures. The Co-Op also claims that the insurance requirement was to ensure that those units with extraordinary upgrades beyond stock quality be covered.

I inherited my unit from my parents. NO improvements were made to our unit for over 40 years other than painting and normal replacements. There were NO valuable upgrades.

Why should I be forced to purchase insurance when the the Master Policy covers the build out? I am perfectly fine living in an apartment with stock cabinets and fixtures.

Now, our Co-Op has been grossly mismanaged. For our 5 1/2 room unit, the Co-op fixed a $250,000 resell price. This sell price is unattainable unless the unit is renovated to include fancy upgrades. I believe that this is the motivation for the board to institute this regulations- force owners to renovate and upgrade to maintain minimum resell value.

After shopping for HO6 insurance, I find it more advantageous to paid the $25 penalty per month than to purchase insurance. I would be saving hundreds of dollars!! All HO6 insurance includes coverage I don't need- personal property, loss of use, personal liability, medical and others to numerous to name. And, I can't strip these extra coverage of and just buy what I need which is the dwelling coverage of $25,000. If I were allowed to purchase just the dwelling coverage, it would be about $100 a year and I would be fine with this.

I do not need personal property insurance as i can easily replace these items. I don't need personal liability insurance because I have an umbrella policy.

My question is this. Can I just pay the fine?

Thanks in advance for any suggestion.

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As Steven424 noted, there are two issues here: (1) Does the Coop have the authority to compel shareholders to carry insurance; and (2) Is it in your interest to carry insurance?

As to (1) Check your proprietary lease. It is possible that the Coop's only way to impose financial costs on shareholder is through maintenance/assesments. Of course, challenging the insurance requirement would require you to get an attorney, etc.

As to (2) I think it's generally a good idea to be insured at least up to the value of the unit. But that's your call.

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You can decide to simply pay the $25, but you'll be putting yourself in serious financial risk. You mentioned two different types of insurance, dwelling coverage (casualty) and personal liability.

Personal liability protects you in the event someone sues you because they claim you were negligent and they were injured. Never mind the truth of their claim, you are being sued. How much do you think it will cost you to defend yourself against a negligence claim? How will you pay any judgment against you (which can run into the millions)? Consider the saying, "penny wise and dollar foolish."

As for casualty insurance, it is difficult to offer an opinion because the actual terms of the co-op's master policy are unknown. Try to get a copy of the policy and have an insurance broker look it over to see where your vulnerabilities are.

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Steven 424,

Thank you for your advice.

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Clinton Hill Area Coop Board Presidents - Frank Feb 16, 2017

I'm beginning my second year as President of the Clinton Hill Apartment Owners Corporation ("Clinton Hill Coops") and am interested in starting a group of fellow coop board Presidents for regular meet-ups to discuss issues we are all facing, best practices etc. If anyone is interested please contact me!

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Co-Op Lease Married / One shareholder - JC Feb 16, 2017

Hello,

My spouse purchased our coop in NYC back in ''85. I moved in sometime in '91, and we married years later. He is the shareholder -- my name was not added to the lease. We set up a Will in the early 90's which leaves me the entire estate.

Should we have my name added to the lease regardless? I've been reading it could cost above 2,000 to do so. Should my spouse, predecease me, will I need approval from the board to remain in our coop. Will they need to see my financials as if I were a new owner? Our mortgage is paid, so it would be just maintenance? Thank you in advance - I'm so lost so I thought I'd start here.

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As a board member, we permit the unit owner to add a spouse to the lease, after being provided with financial data as if the second party were a buyer. We're looking to see that if the current owner were to pass, there is sufficient ongoing income (or financial reserves) available to continue with maintenance payments. We charge an application fee and the management co. charges a fee for share transfer. You should also speak to an attorney for guidance, since it can expose your property to claims made against your spouse, etc.. And check with your coop for their policy and fees.

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Sub metering - Harold Feb 04, 2017

Thank you for all the input. It has been very informative. As I am a relatively new board member, there are procedures that I'm unaware of. At my co-op there is a Capital improvement Committee (CIC) that has made arrangements for sub metering without the entire board voting. I have made several requests for a vote by the board to no avail. Should the CIC proceed without bringing this matter for a vote before the entire board, what recourse do I have? Also, I believe the CIC is being advised by our attorney that this is legal. My belief is based on the fact that when I bring up a motion for a vote on sub metering, she is the most vocal opponent. Should we become sub metered as a result of this erroneous legal advice, can you advise me as to which agency I file a complaint against the attorney?

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Boerum Hill Meetup? - BK Chris Feb 04, 2017

I joined the board of my 38-unit condo in December, and I'm looking to meet board members of similar buildings to share ideas with. I'm particularly interested in ways to engage and communicate with elusive or remote owners.

Anybody in the Boerum Hill / Fort Greene / Park Slope area interested in grabbing coffee and sharing experiences?

Thanks,

Chris

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Bulk Contract Agreement - Frank Jan 30, 2017

Hello. My co-op recently entered into a bluk agreement with Cablevision. A resident has requested a copy of the agreement. Question: Can the resident be legally denied a copy of the requested contract?

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Ned, I do not believe that shareholders have a right to view individual contracts. Shareholders are entitled to a copy of the annual audit and financial report, which must be prepared using GAAP guidelines. The report only contains dollar amounts. It does not go into individual contractual details unless they deviate from standard terms and conditions and materially affect the finances of the co-op.

Also, many contracts contain competitive information that is proprietary to the vendor. It may contain specific terms regarding non-disclosure. When my building had a contract with a DTV service provider it contained a non-disclosure clause.

I'd like to point out something to be very wary about with cable contracts. Many require a certain number or percentage of building apartments subscribe. If the minimum number is not met, the co-op corporation is responsible for making up the difference in monthly fee income to the cable company.

This is the reason we never renewed our contract. We had a second DTV service provider wire our building so we had competition. I also knew that there were more and more ways individual viewers could obtain all the channels and services they wanted over the internet. Fewer and fewer each year were signing up with the cable companies for DTV service. It seems ludicrous to me to put the building at risk for multiple years to subsidize natural changes in technology.

I would ask your board if the contract contains any performance or minimum subscriber guarantees. If it does, you building may end up subsidizing the dwindling number of apartments who remain with Cablevision.

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Hi Stephen; thanks for your thoughtful response however I do believe that shareholders can in fact view, if requested, (versus get a copy) any financial information and that includes contracts. A board is signing on behalf of all shareholders and if someone is signing on your behalf, you are entitled to view what has been signed.

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According to the New York Cooperative Corporations Law item 75, Audit and annual report, this type of information should be available for inspection by any member. In other words, they may request that you come to the office to inspect the agreement versus giving you a copy of the agreement. I would put in a request to view the contract at a date and location of their choice as per article 75 of the New York Cooperative Corporations Law. You could add "or alternatively, provide me with a copy of the contract".

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Sub metering - Harold Jan 30, 2017

The co-op I live in is considering sub metering. At one of the meetings with an EN-POWER representative, he stated that before we could implement sub metering we would need shareholder approval. However, one of the other board members remember differently and states the rep never indicated shareholder approval is required. My questions are, do we need shareholder approval before proceeding? And if so, is this a legal requirement? Thank you.

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Unless the Board gave authority to the CIC to pursue submetering, I would suggest that the Board vote to approve the project. If nothing else, the optics to shareholders are better. Submetering saves the building money. It's been proven time and again. Some shareholders will pay more. Most will pay less. They ones that pay more will be vocal. It's much better for an entire Board to be behind the project than a subgroup.

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Thanks for all the input. It has been very informative. As I am a relatively new board member there are procedures that I'm unaware of. At my co- op there is a capital improvement committee (CIC) that has made arrangements for sub metering without the entire board voting. Should they proceed without bringing the matter before the entire board for a vote, what recourse do I have? Also, I believe the CIC is being advised by our attorney that this is legal. I disagree and if the committee continues on this route and has our building sub metered without a vote by the board in its entirety, can you inform me as to which agency I file a complaint against the attorney?

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Thanks for all the input. It has been very informative. As I am a relatively new board member there are procedures that I'm unaware of. At my co- op there is a capital improvement committee (CIC) that has made arrangements for sub metering without the entire board voting. Should they proceed without bringing the matter before the entire board for a vote, what recourse do I have? Also, I believe the CIC is being advised by our attorney that this is legal. I disagree and if the committee continues on this route and has our building sub metered without a vote by the board in its entirety, can you inform me as to which agency I file a complaint against the attorney?

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I don't think that shareholder approval is needed. When we talked about this issue, it was treated as one of those Board decisions that would be made (like so many others) on behalf of all shareholders.

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> Join the conversation Comments (3)

The board can approve sub-metering without shareholder approval, although many boards may not want to take such a step without shareholder input. The Public Service Commission only requires Board approval, but they want proof that the shareholders have been property notified.

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The newer, October 2014, NYSPSC regulations do not require a vote by the shareholders. It is up to the Board to decide on submetering. As a submetering company, with over 35 years of experience, who regularly works with Co-ops to get PSC approval, we know and follow the regulations. If your building is Master Metered, you will have no issues getting PSC approval. If you building is Direct Metered, your application has to have, at minimum, the intent to add some kind of back up power source such as solar or CHP, combined heat and power. Please feel free to contract us for a free walk through. We would be happy to provide information to the Board on the benefits of submetering.

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If there are any limits to the boards purchasing authority (i.e. over X amount requires shareholder approval) and the cost to implement sub metering is greater than this amount, then they would require shareholder approval. If there are no limits (or the cost is less than the limit), then they do not require shareholder approval.

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> Join the conversation Comments (1)

Ned,

Thank you for pointing out this possibility. Our Board does not have any such limits, so we did not require prior s/h approval.

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Hi Marty, it's something that your co-op may want to consider a Limits of Authority clause. That way shareholders have a say in expenses exceeding X amount. The clause is not to limit or restrict the board in as much as it is to ensure that shareholders are aware and support expenses exceeding a certain amount (and other items that could be included in a Limits of Authority clause).

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Ned,

I understand what you're suggesting. Would you include an expensive roof and/or boiler repair as part of a Limits of Authority clause?

I see potential trouble if you do, because these things are necessary and must be repaired quickly. If "x" percent of s/h don't want to spend the money, then what does the Board do?

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We also have a clause within Limits of Authority that allows the board in cases of emergency to proceed without shareholder approval, regardless of the cost. We further define what an emergency constitutes, i.e. immediate or impending risk to health, life, property, infrastructure, safety, security or the environment.

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That makes sense. As far as getting shareholder approval on other types of projects, that seems to be possibly very time consuming and expensive, because the Board would then have to give out pertinent information to all shareholders so they are up on the details. Then there's the part of waiting for s/h feedback. How long does your Board wait? Is there a quorum of voters need to make this type of financial decision?

I guess our co-op feels that the Board is elected to make such types of decisions. If s/h aren't pleased with the Board's performance, then vote 'em out.

I've served on the Board for more than 20 years and there's never been a whiff of impropriety from the Board, so it hasn't been an issue for our co-op, although I could understand why some might think it's a worthwhile idea.

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new elevator - Sue Jan 24, 2017

Our building (a 13 Unit Pre-war) is about to install a new passenger elevator. Building has a manual freight elevator which must be run by the super at an hourly rate. However the freight does not open on one of the units - which is on the 12th floor. The family is this unit will have to relocate during the installation of the new elevator, this may take as long as 3-4 months (if all goes well).

Can anyone offer some sound advice on this project as well as advice on the Unit that must relocate.

Thank you.

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Is there a reason why the 12th floor residents can't take the elevator to/from the 11th floor and walk up/down 1 flight of stairs? Is there a problem with the 12th floor - the door doesn't work or doesn't exist?
As Carin stated, having a firm deadline and penalty clauses may reduce the timeframe. I would be flexible on the start date until the required parts are on site and checked to see that they are to specs. Push back the start date if necessary until everything has been checked.
I was recently told by our elevator company that there are new NYC elevator requirements that need to be in place by Jan 1, 2020 that will take most NYC elevators out of service for the work required. He also recommended upgrade of our control panel due to its age (only 18 years old) as parts are getting harder to obtain when needed. With the control panel replacement, the elevator could be out of service for 4-6 weeks. Ballpark cost per elevator with the new control panel $80K.

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We had long delay because doors were mismeasured and then firm didn't complete finishing touches because we enfoeced late penalties, including leaving open permits. Post if you'd like to discuss fully.

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