IN doing a refinance, you should sit down and start soul searching:

1. Do you need to dilute your current equity for, e.g., capital investment and you are going to request above and beyond your current mortgage in order to perform that work?

2. What capital improvements do you plan to perform and what is the budget to do the work? Do you have an engineering study to help you with that budget? Are some of these capital improvement covered under programs for reduction of energy that may be finance with low interest loans?

3. Do you currently have a penalty on your ballon if you were to take advange of lower interest rates? What is the amount of that penalty? Run numbers to find out if it makes sense to do the refinance before or wait a 6-12 months more.

4. What would the current bank do for you NOW in terms of refinancing before? Interest rates? Forgiving the penalty? etc. Start talking with them. Talk is cheap and helps to get training when the real negotiations start!!!

5. Do you want another ballon or fixed interest self-amortizing mortgage with some sort of credit line associated to the mortgage for the life of the mortgage (not just for the first 5 years of the mortgage)?

5. Contact other banks and let them know you are shopping for a new mortgage? I would do knocking doors first by going to directly to the different banks, i.e., NCB, Amalgamated, etc. Then, go to a broker if this is not effective. Speak to your management: he/she may know some contacts in the banks and reputable brokers.

6. Can you lock the interest rate forward for the next 6 months, 1 year or 18 months? We did this and lock a fantastic rate. However, we could only lock 6 months.

8. Speak with your independent accountant so that numbers can be run of the different offers and comparisons may be established. If in your "green board" you have someone with financial background have the person be the contact for banks or management on this topic and have the person develop an Excel spreadsheet to compare apples to apples as far as bank costs go.

9. The spreadsheet should have all the costs defined. Some banks will quote one thing and not the other; thus, by establishing a comparison, you will see your costs - Example: All banks charge you for environmental studies, engineering, etc. different costs. Your bank probably will skip those costs costs because they already had those studies done. So, you may have a savings there, but not in other areas.

Finally, bank are there to make money just like brokers; thus, they are not your true friends. Brokers will try to negotiate for you the best deal because you are paying the commission. So, commission costs are important. Therefore, your job is to push the deal to the edge of the table and get the best terms for your mortage.

Good luck!

AdC

Couple of points:
It is great you ask, many just jump in blindly and regret decisions later..

1. First: BE CLEAR ABOUT THE REASONS YOU WANT TO REFINANCE - What are your goals? do you want long term debt, or no? Self amortasizing, or not? is your aim just to keep payments low, or pay it off? Do you want cash out?, etc.. see below..

2. FIND A GOOD LOAN OFFICER AT A TRUSTWORTHY BANK OR BROKER - you will probably want NCB or M&T or the like, many brokers/bankers can be recommended.

3. GET QUALIFIED - Submit app and all required docs

4. DECIDE ON THE TERMS OF YOUR LOAN - you should be presented with several options to review.

5. YOUR BUILDING WILL BE APPRAISED - An environmental report may also be requested.

6. YOUR FINANCIAL SITUATION VERIFIED

7. A TITLE SEARCH WILL BE PERFORMED

8. CHANGE YOUR MORTGAGEE CLAUSE ON YOUR LIABILITY INSURANCES

9. CLOSE THE LOAN
10. FUNDING THE LOAN
11. CONGRATULATIONS!

Before a co-op approaches a financial institution about refinancing, it should carefully assess its current financial position and accurately determine what the real refinancing needs are. In instances where the co-op may be seeking additional money in order to make capital improvements or to comply with Local Law 10 or 11 requirements, it is not uncommon for a co-op to end up borrowing too little in the name of frugality.

As the board, you can contact half a dozen banks or lending institutions and request proposals for your needs. Or you can hire a financial consultant to do the research and bring the best deal or two to the board for a decision. You must certainly look around, though--on any given month, it can be a different institution that's offering the best deal. I also strongly recommend you involve your accountants and lawyers in the process. They are professionals who can open doors that had not been explored. Only if your managing agent is competent enough for the task, should he be entrusted with this.

Co-ops should work with their accountants to accurately forecast their needs for capital, as well as the building's expenses five, ten and up to 15 years ahead, this way, the co-op will borrow the appropriate amount of money and not fall short, sending them back to the bank a couple of years later for another round of financing [when interest rates may not be so favorable.]

Tax write-offs aside, and despite the fact refinancing will affect you directly as a shareholder, your co-op board does not have to put their refinancing plan to a vote amongst the shareholders--unless it is expressly written in the cooperative's bylaws. Given that shareholders often cannot agree on a color for the lobby walls, it's sometimes best to leave certain financial decisions to the board alone.

Most economists and experts in the market believe mortgage interest rates will eventually begin to creep upward. How quickly that will happen is uncertain. However, interest rates have the ability to go up very quickly in the right market conditions. What effect would that have for a co-op and its shareholders? Like the long-term course of rates themselves, this is also the subject of debate.


The following is a link to a good past COOPERATOR article:
http://cooperator.com/articles/636/1/Need-You-Know-More/Page1.html
Hope this helps.

~AR

I agree with the other feedback AR + ADC.

But most importantly, what is your program to retire the debt overall? Yes, retire the debt. If you don’t have a long term program, e.g.: twenty to twenty five years, all this work to “refinance” is a waste of time and energy. Why leave a debt burden legacy for future generations much as the government does these days.

Your board needs an independent financial planner, I don’t mean your attorney, your bank or your accountant or accounting firm. You really need a true financial planner.

You need a strategy.

Interest expense is non-performing. Having a tax deduction for residents is useless.

All need to wake up and find a way, albeit very long term to eliminate “all” debt. Yes, I can make this assertion, as we retired the original $7,700,000 debt for our five hundred unit coop without ever refinancing.

Do you have assessment?

My suggestion without even seeing your finances or books is to make the assessment equal to two months of your monthly maintenance each year. Incredulous, then look at your AICPA mandated schedule of forecasted capital expenditures. You do produce one? Older buildings will need the two times, younger buildings then one time.

To avoid this introspection is to fail in your fiduciary responsibilities.

Along the way, I assume that you are brilliant financial planners and you "do" raise the monthly maintenance each and every year by 3 to 4%. And, I assume all are honest fiduciaries and thus don’t run for the board on a popularity slate, e.g.; we didn’t raise maintenance. There is nothing but chicanery in not raising maintenance every year, yes, every year.

You are in an ideal position to explore a new option : co-op to condo conversion.

There are many benefits and advantages for your co-op especially if you are near the point of refinancing.

At the Cooperator Expo, I atended a seminar held by a conversion company by the name of ROA Hutton, LLC. They have a website www.roahutton.com

Cooperator corporate presentations are self serving and suspect.

Sure convert to condo, but with eyes open.

But if you have a mortgage, then the shareholders need to “eat” the mortgage burden to convert.

So someone has a coop loan.
For argument sake let’s say there is $100,000 outstanding on the principal.

Then let’s say this is a 400 unit coop.
Then let’s say there is an $8,000,000 outstanding principal on the coop’s mortgage.
This means, on average, each unit needs to assume $20,000 of the unpaid principal.

Now be very honest.
Have capital improvements been performed as defined by an outside professional engineering firm or have the prior boards deferred needed expenditure?
If expenditures have been nil or deferred, then in converting you will need to obtain an additional influx of capital to provide the basis for funding all the ignored capital improvements.
Let’s say that $10,000,000 in capital improvements have been placed on the back burner for future generations to fund, but the past is now.
On average, each unit will need to underwrite $25,000 for these unfunded capital improvements.

Then, let’s not forget the converter’s fees; these will be somewhere between $2,000 to $3,000 (I would say regardless of the firm) per unit. Not much but still a sum that needs to be funded.

Then there’s costs to the coop corporation for attorney fees (new bylaws, etc.), bank closing costs to retire the mortgage sooner than anticipated (if this is the case), engineering study, etc. Let’s use $1,000 per unit average.

Finally, some closing costs for the shareholders, including title insurance, etc. Let’s use $1,000.

OK, let’s recap.

$ 100,000 unpaid shareholder loan principal.
20,000 outstanding portion of coop corporate loan
25,000 unfunded capital expenditures
2,000 converter fee
1,000 coop corporate costs
1,000 closing costs
---------------
$ 149,000 cost to convert average shareholder
---------------

Yes, the shareholder can typically take a condo mortgage to fund the above amount in total. But, we need to very honest and open as to the full burden of costs.

Yes, a condo mortgage is typically a bit less, about .25% than a coop loan.

Yes, many banks will make a forecast of the “new condo” value of the unit and thus the higher assessment (by the bank) will allow for a higher mortgage principal.

Yes, the shareholder can “roll” all the costs into a new mortgage.

Yes, condo’s command higher prices.

- - - - - - - - - -

Yes, there are reverse mortgages for those over 62, but do please remember that if you elect to follow the path of converting from c0cop to condo, you are promoting a conversion and not mortgages, not reverse mortgages, etc.

Yes, typically for a small number of shareholders there are tax implications, e.g.: the conversion transaction is not tax free. Many converters seem to gloss over this issue

- - - - - -

Not trying to dissuade you from converting. Just trying to make you aware of the full burden that all face.

Ted,NJ

There is also reserve mortgages available for co-ops for Sr. citizens. This is not just an exclusive type of tapping into equity for condos and single housing.

Finally, I know it was for argument sake, but it is important to clarify that the underlying mortgage will have to be divided by shares. In some cases, co-op ownership is a first step type of ownership; therefore, many shareholders may not be in position to absorb the burden of a very large mortgage. Therefore, they will either have to sell or else...


AdC

My point in showing the full financial burden attendant to a conversion of a coop to condo wherein the coop has an underlying mortgage is that some folks will not be able to absorb the higher “mortgage principal” demanded by the need to retire the coop‘s mortgage and perhaps fund neglected capital expenditures.

A bank, worth its salt, will not write mortgages for a building in disrepair. And, let’s not forget, a condo/HOA and virtually nil borrowing power. All that an HOA can pledge is its future income stream.

While the owner’s reap a substantial number of benefits, the HOA is somewhat more constrained in its actions.

Yes, only condo owners (e.g.: deeded property owners) can avail themselves of a reverse mortgage, a selling point for conversion. The AARP offers some very good and very simple literature.

Yes, 100%, the shares dictate the apportionment of all costs, save the shareholder’s own fees incurred in a conversion, e.g. title insurance, mortgage appraisal, filing fees, attorney fees and any bank fees while rolling a coop loan to a condo mortgage.



.

The AARP booklet that details reverse mortgages (Home Made Money)is available via a telephone call to ARRP at:

1-800-209-8005

In our process, we have suggested that all who have an interest in reverse mortgages call AARP for the booklet. This is in lieu of obtaining a supply and then distributing the booklets; which in our mind crosses the line and then becomes "promoting reverse mortgages".

This was my first clarification point, i.e., rerverse mortgages are not just exclusive rights of condos.

AdC

Sorry, I really reversed "reserve".

dont go with a card go with a Fob. A fob is a 25Cent size disk that goes on a key chain and you just touch it with a magnetic reader. They are in expensive. However you do need a computer and programe to progame each fob as needed. We have such a system for the roof terrence and all mechanical areas. The fob report who entered what and when etc.
Pg

we have a fob system but all the fobs are programmed the same. I'm sure there is a way to make each one different but that requires not only programming the fob but programming the door as well. You could get a different fob for each shareholder and and a different one for a shareholder's cleaning person and only allow access to the building for the cleaning person's fob 9-5 Monday to Friday but someone is going to have to program the door too. That means a (expensive) computer controlled door and telephone lines to dial in and program it.


Just as an aside I discovered that my fob opens the doors to the showers at my friend's marina in Port Washington so don't count a really high degree of security unless you do program everything

We invested the money once. Got the right equipment and our system works great on 6 doors. Every door is assigned different codes and hours of use by different access groups etc.
There is no short cuts when it comes to security and doing something right the first time saves in the long run.
Pg

We put them in our building for same reasons that yours and many were sceptics. I have to say that since we bagan to use this system everyone is happy. They do work very well and make life easier. The only other consideration is that they work with electric and in case of blackout you are locked in your building....
Miriam

In NYC it is probably illegal to have a electronic door lock that remains locked when the power is off.

The lock should be made that in the event of a power failure the lock remains off.

You would have a big problem in the event of fire and the lose of life if persons could not get out.

Many times I have thought of this as a good way of controlling entry. However, there are those who can leave the door open by blocking it for friends too!

We have a regular key, and I agree with BP. However, if we ever change our locks (we cannot go for a keyless systems because our building does not have other doors leading from the interior stairs to the outside) I will have a $500 deposit for keys that do not reproduce. Right now a $15 deposit is NOTHING, so keys are lost and given to the dogs.

A steep deposit will ensure that the keys are returned and only one extra key may be obtained for an outside family member.

AdC

I have them in several buildings. I am installing a new system in another building as we speak.

What we do is separate access for different people as follows:

Nanny’s/Housekeepers 7am-7pm
Contractors - 8:30am-5pm
Shareholders - 24/7

All fobs are numbered and we know who has which number and who enters (via the fob reg #) at any given time. The fob access may be changed or shut at any time if lost or stolen, etc. If you have access panels in the laundry area, storage area and others, you can permit access in one area and limit the other which is really cool also (would be good for the other poster who wanted to provide free laundry to residents)

So, the level of security is fabulous... it also helps against illegal subletting...
It's a little more work, but I'm an advocate

~AR

Since I live in the building, it is my duty and right to politely question ANY strangers I see in the building. Nine times out of ten they are guests who are not escorted by the shareholders in the building. We tell the shareholders to accompany their guests in the common areas, so they won't get questioned. We have a right to know who lives in our building and using our facilities whether the shareholder(s) tell us or not. Our right to protect our property supersedes a shareholder's right to hide their roommates. You don't know who they are giving shelter to. A roommate should not want to hide from the BOD.

And we still use keys for the front door.

Several apartments in our building were burglarized by someone posing as an evicted roommate several years ago. If we had prior knowledge of all roommates in the building, this person would have been caught. It's a question of security.

Forgive me V but what point were you trying to get across. The question asked was about some sort of "key track system".

Mike.

Well we still have keys! I don't think we are getting an electronic system for the front door and with all the extra people in the building, keys should do just fine for now. I would not recommend an electronic system.

Know who lives in your building!

Thanks Big Al(Gore)for the update.

FN

Forgive me, but what is your question that you want help with. It is a little confusing.

FN

Sorry. The situation is we have a small brownstone building. We fixed up the basement(cleaning, painting, etc.) We want to allow people to storage in the basement ( not storage lockers or storage company) just kind of like a small cabinet. There has not been storage ever in the building. Every apt. will get a storage space. We want to give pwner occupiers free storage as a perk for helping run the building ( and all of them fixed up the basement). we want to charge subtenants for the storage access. My question, is can a co-op charge subtenants if they want to use the storage space while live in owners get it for free?

Alisa, You had better ask your co-op attorney. The reason is that your proprietary lease probably includes such things as added amenities. As someone posted earlier, one thing to watch for with added features in a bldg with a sponsor is that in general you can't legally take a service away once it's there.

My building has added storage space and other things that are available at a fee to everyone. Our lawyer says that as long as there's a charge, you can take it away (i.e. close the storage space for everyone for some reason) without the sponsor/subtenants claiming a reduction of services (because it was not free).

I haven't heard of charging only the subtenants for a service. Sounds as though you're creating two classes of residents. Maybe it's legal, but in case it's not, run it by your lawyer to avoid the potential of facing complaints or, worse, a lawsuit.

Another reason to involve a legal specialist is that you may need to update your certificate of occupancy to show that you're using previously vacant space for storage.

And get the sponsor involved soon! He/she may have an answer from experience in other buildings.

thanks for the great responses. We are going to run this by with our lawyer.

Just wanted to post an update. Our lawyer told us that we cannot charge different people prices. He told us that do not need to charge a fee to be able to take away the amenity is needed as it is not in our original proprietary lease.

Alisa, thanks for the update. I want to clarify your post, however, because I may be reading something into it...

Are you saying that your lawyer told you:
1. That you cannot charge different fees for different people?
2. That you do not need to have a fee-based structure if you want to guard against tenant lawsuits for taking away amenities?
3. That if an amenity is not in the original Proprietary Lease it will NEVER be subject to amenity disputes?

Please confirm and/or elaborate, if you have time?

THANKS.

Our lawyer told us we cannot charge different fees to different tenants. So we cannot charge subtenants more for storage than owners. He did say that since we had co-op members work on fixing up our basement, we could have paid them for their work. We did not do that.
He said that since it is not in the proprietary lease, we can take it away at any time, regardless of whether there is a fee.
He did not say we would be safe from lawsuits ever. I don't think we asked him that. However every time I visit him, it seems like we can be sued for everything! (I figure since he is a lawyer he hears lots of the bad, none of the good.) A friend told me about how a lessee sued the co-op after it had removed some things of hers from the storage. The items were against the rules, she had received written notices about the items. She sued the co-op. She was wrong, but its still a lawsuit to deal with until it gets thrown out.
He did say we should require anyone who stores items to provide proof of insurance, (not the co-op insurance), but apt insurance.
hope that helps!

1) make everyone who signs up for storage sign a contract/ rental agreement saying the coop/condo is not responsible for their stored items and that no flammable liquids, etc can be stored.

2) charge eveyrone $5 a month.

3) subtenants should be billed through the primary tenant.

done.

We charge 20 for small storage space and 25 for large...

I Don't quite understand what your asking...

How did the Owners/shareholders pay and not the tenants?
If there was an assessment, or if it was paid through maintenance, then they paid just as much as you did, because those units pay just the same as anyone else.
If you are assessing special for the purpose of building the units, and excluding the sponsor/investors from the assessment, then your statement is correct and your actions justifiable. - That's just an opinion

~AR

If renters had storage space prior to converson, then you can not take it away or charge them for the storage space. This would be deemed as a decrease in service. IF however, there was never any storage space and a space has been made for that purpose, they you may charge for the storage space. Keep in mind what AR said, if monies came out of maintenance then the sponsor or investors of rental units have most likely paid for it.
Pg

It sounds like you live in a building where all the units are sold, and some units are being sublet by the share holders. And that there is no sponsor or rent regulated apartments.

I don't think you can offer an amenity some share holders and not all of them in that case it is the over tenants decision as to if his or her subtenant gets storage or not and for how much.

The advice to involve your co-op lawyer is important as the co-op or condo with stosrage becomes a bailee and there are obligations to fulfill.

However, I am confused. It seems you have a common area without cages now that will be open to the residents in order to place their own cabinets. Is this what you are intending?

If you are only providing a common area for residents to put their own closets or cates, you are better off going one further step and buy equipment (cages, cabinets, lockers, etc.) that can be anchored to the floor and between each other so that they will not topple over and create a liability issue to a resident or to other cabinets. I'm sure you are better off laying out the storage place so that everyone gets equal access, but more important, provide emergency lights and a path out in the event of blackouts or emergencies.

Regardless of how you intend to use the storage, ascertain that it is flood-proof or water tight. You do not want to have residents store things that may be subject to water damage or mildew to avoid nuisance claims.

Rules for storage should be created and enforced, i.e., define what may be stored, vacate prior moving out the space. As the bailor of the space, now you have obligations that you assume and throwing things left over become a procedural issue.

Obviously, some of these questions should be cleared with the attorney.

AdC

Our space only allowed 250 “dog kennels”. Thus, not enough for all.

We charge a one time transfer fee of $25 for admin purposes.

Then we charge $6 a month thereafter.

We do not permit any storage cage use by sub-tenants.

That’s it. Don't know if this helps.

Several things you can do... need more input...
Coop or Condo?
Are unit owners permitted at this point to have machines in their apartments?
does the building have the cash to purchase outright or are they planning on leasing?

Some options without hearing your response is coin machine, card credits (different ways of doing this), raising maintenance and providing it free, lease it out...

~AR

We are a co-op. We were planning on buying out right as we are only getting four machines total. We looked into laundry services, but couldn't seem to find anyone interested in that small a building. No machines are allowed in apts. We are a five story brownstone, so a very small intimate type building. We looked into the card reader thing but couldn't really find any specific info, leading me to think that it was more for a service or professional laundry. The main reason for a pay system was to offset the potential increase in utilities. so we wouldn't have to raise maintenance to do it.

AdC pretty much hit it on the head.
Free is where you want to be.
Budget all your line items in, and add it to the monthly maintenance. You still should consider some type of coin system that uses a special slug or card. this way you can track the usage, and avoid residents using it to do their friends laundry since it is free.

Good Luck
~AR

Have you tried Hercules? They may serve you.

We earn $100 a month from Hercules, no matter how much the machines/driers are used (43 units).

Remember that number when you look for ways to offset rising utility fees, because you won't get much compared to the cost of electricity and water. In fact, you may just break even when you consider that you will use more water and electricity to run the washers & driers. Instead, think of them as an amenity for the building that will make it more attractive to buyers (and for residents!).

my opinion is that your building is small enough just to a monthly fee for washers n dryers added to the maintenance. I mean what the heck, why bother with by adding honor system (that usually dont work) or added work of collecting coins, freeing jaming coins etc. A large commerical Laundry company may not want to bother as there is little profit for them.
Again, make if free and just have the cost divided by 10 and added to the monthly bill. Regarless if people use it or not, as it is there should they need it.
I think it is the better way for small buildings.
Pgrech

I would agree that doing it for free would be ideal. How much more are you going to spend for having one to four machines? $100 a month in utilities or $1200 a year or $120 more a year maintenance, i.e., $12 a month per apartment!!! You are talking peanuts.

Everyone pays through maintenance the service and be done. Obviously, if you buy your machines, then you have replacement costs and service contract to add to your budget. I'm sure it will not be that much and will take the quarters, the use of cards, etc. out of everyone's mind. Similarly, everyone will be conscious that their friends, if using the machines because it's free will realize that their maintenance will go up as a result of more equipment downtime, replacements and utilities.

AdC

Just wondering, do you know if these new dryers would have lint containers that could easily be cleaned after each use or are they like the large one in our small building which is locked, and can only be cleaned by the super? Of course, I'm thinking of fire safety, since lint fires in an unattended basement could be real trouble, of course.

I agree that your co-op is responsible.

If your Board had been less penny-wise, pound-foolish, this would have cost a LOT less.

Still, they're fortunate the Shareholder isn't suing for a lot more.

Sally: First - How did your resident get a leak under his floor? Was it, in fact, a "leak"? Did a plumbing line/pipe under the floor break? Or was there a flood/overflow in the apt caused by the resident or a neighbor? Was it something else? Just curious.

If it was a bldg fault, the first thing mgmt should've done was call the coop's insurance company. They'd pay most/all the repair costs. That's what insurance is for. Coops tell residents to always use licensed repairmen/contractors to protect against poor workmanship and save money. Your coop was foolish not to do that themselves. They didn't save any money, in fact, they lost money. Maybe the resident didn't know enough but he shouldn't have allowed your unlicensed super to do the work in his apt. Many experienced supers know plumbers, electricians, etc. they can call to do work in their bldg, but I never met a super who's also an expert at plumbing and laying floors.

I'm not sure but if the coop or insurance had no written agreement with the resident to pay for or reimburse him for floor replacement, he may have forfeited the right to hold the coop liable for it by just getting it replaced on his own. I am NOT sure about this - do ask your coop attorney. There is or was also a question of habitability. Maybe your resident could've gone to a hotel until the leak/floor were fixed if the apt was unliveable and the coop would've had to pay for it. Or maybe he could've deducted part of his maintenance for time he didn't live in his apt. I assume he didn't stay anywhere else, the leak is fixed, and the floor is now replaced so I doubt he has a case. I am NOT positive so ask your coop attorney (or tell the resident to ask his own attorney) about this.

BTW, protections under the warrant of habitability only exist if there is a "landlord-tenant relationship". Courts have consistently held that since coops give shareholders a proprietary lease, this relationship exists but it is not applicable in condos since there is no lease or any such relationship between a unit owner and the condo (homeowner) association. Just threw that in FYI.

It doesn't strike me that your mgmt people are the right ones to ask about all this if they were foolish enough to let an unlicensed super do major work in someone's apt that he was in no way unqualified for. Talk to the attorney.

Hope this was of help in some way, Sally.

thanks BP - it was a pipe under the floor. in a coop.
I do not think residents can refuse the coop sending someone in to fix a leak even if they are unqualified staff.
also many residents do not know that it is illegal to have unlicensed plumber in the walls - they think because it is the Super it is OK.

distrubingly, the buildings has even been given a violation before for having the unlicensed staff member do plumbing work. the resident protested the second time around and asked for a guarantee to quality floor replacement. the coop insisted on repairing the pipe and the resident ended up paying for an outstide contractor to do the floor but is still trying to get payment from the coop.

Funny how when others use unlicensed contractors it is not OK, there seems to always be a double standard.
If the building superintendent is CAPABLE, then let him do it. The floor should not have been closed until the leak was verified by management as properly repaired (therein lies the problem).

The flooring, even if it is a coop related plumbing leak (in the wall/floor), is still the shareholders responsibility as per 99% of Proprietary Leases. At the point that the repair is confirmed as complete, the Shareholder may perform the repairs at their own cost, or call their individual homeowners policy to place a claim. Some Coops do make these repairs when it is not too extensive, but I personally don’t believe they should. Always draw a solid line.

Remember, I did say if the super is competent to perform these repairs, this is a judgment call that can make or break the entire process. He is a building employee, and as such, licensed to perform these repairs within the building (within reason).
It sounds more that the project was improperly managed.

Being the shareholder is responsible for apartment finishes, the Coop Board will use less expensive labor of it deems it a better financial and practical decision. Your PL usually indemnifies them as well with some language (The Lessor shall not be liable, except by reason of Lessor's willful acts or gross negligence…) as such. It does not make them right, but it does justify the decisions to have in-house help perform many repairs that should be done by outside professionals.

AR thanks but a few points: the house rules require the shareholders to bring in licenced plumbers whne required by code (plus pay a fee for a horrid renovation argeement). yet, the coop can bring in an unqualified worker to do work that may violate city codes? Nope. seems wrong and also unwise. . I would say it is gross neglegence ont he part of the coop to allow an unlicenced person to do in-the-wall plumbing - esp when it has not been sucessful on two pervious occaisons causing additional damage to neighboring apartments - and it in full knowledge of possible consequences. no?

Obviously, your house rules would have to rule any decisions the Board, or any shareholder makes.

However; unless something requires a licensed plumber to physically file, obtain approvals & sign off, there are no city codes being violated. The only thing being violated is the house rules, but, then again, only in case of the aforesaid, would a licensed plumber be needed, thus, not even a violation of your HR.

On the other hand, if the super cannot make a proficient repair, and has proved this in his previous attempts, the manager/Board very well should have brought in a professional.

~AR

thanks AR but for your info: city codes dictate a licenced plumber for work in the walls. it does not matter what teh skill level of the super it. legally a licensed plumber must be retained when it is other than a faucet or tiolet installaiton. it says this smack on the dept of buildings website. there is no grey area.

my questions concerns the level of neglegence on the oart of the Board when they decide to send in an un licensed person and the job is screwed up causing additonal damages to shareholders.

Sally, you should check with the co-op attorney (I'm asssuming you're on the board) to find out liability here. You may be right that the board was negligent, in which case I would suggest that the board pay all costs and fees to cure the problem -- and do it soon. But, again, check with the lawyer first.

Plumbing work is defined by the NYC Building Code as “the installation, maintenance, repair, modification, extension or alteration of any waste, domestic water, gas or fire standpipes in any building or piping system.”
The Department of Buildings Plumbing Division has offices in all five boroughs. The Plumbing Division is charged with enforcing the City's plumbing code to make sure that drinking water is kept safe from contamination and that gas lines and appliances are installed and maintained in a safe manner.
Application and Permit Information
Simple repairs or direct replacement of existing faucets or fixtures such as toilets and sinks are considered cosmetic work and do not require a permit. Direct replacement involves work that does not alter or change the fixture's hot and cold water shutoff valves or fixture trap.
Work involving the alteration, rearrangement, relocation or permanent removal of any piping must be supervised by a licensed master plumber or fire suppression piping contractor.
The aforesaid is direct from the DOB sites.
NOTICE that replacement of plumbing does NOT require a permit. Thus, the repair of a steam pipe, etc… does not require permits and can be done by any COMPETENT super.
The following is just supplemental information for anyone’s perusal with regard to a supers tasks/duties and requisites.
“The First Assistant Building Superintendent performs complex repairs and maintenance tasks, provides guidance and supervision to subordinate employees on the maintenance staff, and performs other related duties”…. This is the NYC Court superintendents duties… http://www.courts.state.ny.us/ea/xml/asp_transform/DisplayTitleStandard.asp?title=9445329

Who decides what your superintendent is supposed to do? The super, managing agent and board have pretty much free range in constructing a job description as long as it's consistent with the collective bargaining agreement, if there is one. I don't know that I would always recommend that there be a written job description because later on if you ask someone to do something that isn't explicitly in there, you can get, "˜That's not my job. Nevertheless, from the perspective of management, it is better to have a clear understanding of what is expected of the superintendent." To ameliorate the apparent negatives of a written job description, any such document contain a catch-all phrase, such as, "Plus any other directive issued by (whomever)."
http://cooperator.com/articles/1078/1/Super-Supers/Page1.html
explains more of the supers duties.

Hope this helps

~AR

If the board decides to "save money" by using an unlicenced person to do inthe wall plumbing or electric and there are damages to any apartments, they are LIABLE - this is NOT representing the ficuciary interests of the coop. It must be by the book and by city codes and not in contraditcion to house rules requiring tenants to use licensed persons - otherwise any decisions to use a "competent" super to do work that violates codes breashes the prop lease. get it AR? this is the core of the point being made.

Why do you ask questions if you just argue with the answers?

Sally, I agree with AR. Many people gave you very knowledgeable replies to your question based on their first hand experience and you keep coming back. It is now up to you, and your board to base your decisions on the feedback.

FN

there is misinformation being given - we have spoken to some people offline and found out it is NOT OK to have an unlicensed staff member doign this work. it is necessary to indicate the liability aspect in case people read AR's messages and get misinformaiton. competence is fine but if there are any mishaps the fiduciary interests fo a cop are at risk.

it is interesting that you try to cut me doen for this. it is useful information for people.

It is the nature of living in America; …. You can use a licensed plumber and still be sued for not using a more proficient one. There is never 0 liabilities with anything you do, simply because you live in a litigious society. Will these things stand in court, that's another question.

I have been doing this for many-many years, have seen most every scenario ever spoke about in this forum and have been down the exact road concerning supers performing plumbers work literally hundreds of times. I say all this not to boast, but to affirm that what I am telling you is based on REAL Practical knowledge and experience, not opinions of related professionals (written, oral or implied).

I am more than confident that when you go the distance, you will see that what I am saying holds water, or I would agree to bear the cost myself... There is no breach in the Boards fiduciary responsibilities if my previous post is followed explicitly.

~AR

Ok well what aobut the fact that my friends building got a violation and $1000 fine formthe city for having the super do unlicensed plumbing and also his work damaged to apartments below? what about that AR?

that is lawsuit if the resident of one of the damaged apts wants it to be. they would win. ALLOWING SUCH A SITUATION IS A BREACH OF FIDUCIARY INTEREST.

Once again, I reiterate my post above..
Simple repairs or direct replacement of existing faucets or fixtures such as toilets and sinks are considered cosmetic work and do not require a permit. Direct replacement involves work that does not alter or change the fixture's hot and cold water shutoff valves or fixture trap.
...Work involving the alteration, rearrangement, relocation or permanent removal of any piping must be supervised by a licensed master plumber or fire suppression piping contractor.
The aforesaid is direct from the DOB sites.
NOTICE that replacement of plumbing does NOT require a permit. Thus, the repair of a steam pipe, direct replacement, etc… does not require permits and can be done by any COMPETENT super.
He must have been doing something that required a permit, or DOB Would not have been there in the first place, in which case he deserved the fine.

was too quick to pull the trigger

AR - If I misunderstood something you said, my apologies.

You said if a super is competent to do repairs, this is a judgment call that can make or break an entire process. I agree that some supers can do certain repairs. They may be licensed plumbers or electricians. Or they may have years of experience at some things and know exactly what to do and how to do it. They may be with the same building for a long time and know its systems and quirks inside out. In such case, a board and mgmt can be pretty confident that a super can handle certain repairs capably.

You also said a super "is a building employee, and as such, licensed to perform repairs within the building (within reason)." This is where I may have misunderstood you. Being a building employee doesn't mean a super is "licensed" to do anything. What he's able to do should be based on his qualifications and experience. Some buildings hire someone who's never been a super and wants to learn the business. Some hire, or promote, a porter to the job of super who may know basic porter/maintenance tasks but little else about taking care of a building yet. Some may have a super who's been with a building for a while (maybe even a long while) but was never very proactive in learning how to do his job well or how to handle certain functions.

The board (or more correctly, mgmt since they work directly with staff) has to decide what a super should and can do.

It's surprising how many buildings keep a super who's lazy, not doing a good job or not that capable because it would take too much time and trouble to find a new super and deal with the upheaval of such a transition.

Sally, like all jobs there are good and bad supers (they are not all bad). Blameing the super for everything is a cheap shot. How about the board and management companies are they not somehow responsible?. Like I said they are some fantastic supers that completely run properties and save the building $$$$$ each year, and then they are not so good supers.

FN

Thank you not seeing, what was not said!
Competent is a KEY word.
I have a super in one of my buildings who is a master plumber, and was at one time (until I hired him). He does allot of repairs for us (here and sometimes in other buildings if time permits).
I make it a point not to hire supers who what to be just someone to pick up a phone to make repairs, and the "jack of all trades, masters of none". I have another building where the super is an excellent electrician (better than most companies I know), and so on. Even if I do not use the super for the repair, they can effectively troubleshoot and diagnose the problem so the appropriate repair can be made. The supers all help each other out. This seems to save allot of money, and add to the efficiency of each building.

While this model may not work for everyone, it works very well for me. I have no double repairs.
It also is a suggestion to many that may be seeking a new super in their building. If your building has issues, then hire a super that is proficient in the area of your buildings weakness.


Best
~AR

Sally I have to agree with RLM, your building is very penny wise and pound foolish. It also appears that very poor judgement calls were made from the beginning. If it helps Sally here is how we handle such situations.

1. Shareholder reports a leak.
2. Building staff, immediately troubleshoot the problem.
3. The staff, expose the areas around the leak (savings)
4. Once visible, we contact our licenced plumbing company
informing them of what we have done so far,what we found
and the materials that are required (savings).
5. If necessary we photograph leak.(In case needed later)
5. Once the repair work is done, we allow adequate time for
the surrounding areas to dry, and also monitor repair.
6. We then write up an incident report and forward copies
all parties involved (shareholder,mgt company,insurance
company.
7. A quick decision is then made on where the liability lies

The above works very well for us as we do "all the leg
work" and let the licensed people fix the repairs. As a
rule of thumb we do not involve staff in repairs where
the risks/liability are high, and where professionals are
required. Finally I do know of a few supers who are
licensed plumbers and they perform repairs in their
building. This would have been pre negotiated.

Hope I was of some help FN

1. Join the crowd.
2. Sell and get my famous Wennebago or camping tent.
3. Offer your services as the Co-op Agent and quit your job.
4. Act as the paid Consultant of the Board with power to override bad decisions. Let the board do the work.

AdC

I would also like out, but have not found a way to extricate myself, short of packing it in and quitting.

It seems there are many bomb throwers but no one willing to step in actually do the work of a board member.

I would love to walk away but also find it difficult.

And this is exackly why, we need to bind together and get a few laws changed. Starting with manangement companies.
Email, has forced our Man company to work. Man companies assign one agent to too many buildings, but in the past, they had to do very little. And, in general no one was watching what they were doing. They often play along with BM who keep their paychecks coming.

CoOp owners have always looked like the priviliged, but our building is in a five star neighborhood, but is still basically a working-persons building. So we do have SH who are interested in the botton line.

But it took four years, of a few of us sticking together to boot out board members who ran the building as their own townhouse. Keep sending Emails, (anyone not doing their job or not playing by the rules hates the Email trail) Save Emails and SEND EVERY CORROSPONDENCE TO EVERYBODY... We found that if you send an Emial to the Pres of the Board and our Man agent, generally it was ignored...Believe me, if we can do it, anyone can....

It's disheartening to read such sad stories about shareholder miscomprehension, professional incompetence and an absence of interest to serve.

Your building can be run differently, and well, but it will take people who are committed to change and honesty to serve. Sound out your neighbors to see who wants a better place to live -- AND who can work as a team, commit some time, and remain honest.

My building, luckily, has a history of honesty. Our previous property manager was scrupulous -- so much so that she and the super would each speak to potential vendors alone, to see if they would offer a bribe to one or the other. Those who did never got contracts. Oversight with the funds and checkbook are critical. Our managing agent has a controller who keeps the book, but our board also retains an independent CPA who verifies all the accounting.

Can things get through? Sure, they can. Nothing is perfect. But we make it clear to staff that we do not tolerate cheating of any kind. Maintaining that standard requires board members who themselves are committed to it.

A point about shareholders. Not until a few years ago did our building even conduct interviews of potential buyers. As the interview procedure has evolved we have used it primarily as a way to explain to buyers (almost all of whom have never owned a home, let alone owned shares in a co-op) that the board is, in fact, the landlord; that shareholders do not, in fact, own their apartments; that safety (from accidents, trespassers and lawsuits) is of paramount concern to the board because accidents can be extremely costly; and that maintenance fees will never go down until inflation does too (i.e. when pigs fly).

A regular newsletter helps to remind shareholders of these points in a friendly format.

All of these things take time and, corny as it sounds, moral standing. (Serving on a board makes me realize why so many companies are so poorly managed: Good managers are truly tough to find.)

As I tell shareholders who don't seem interested in the co-op, "My apartment is my biggest single investment and maybe yours too -- if you want any investment grow in value, you have to take care of it." That means maintenance increases to cover rising inflation, assessments to fix a leaky roof, and strict oversight of renovations.

I find that most shareholder misunderstandings come from one of two erroneous points of view. Either they believe they own the physical apartment (and so ignore the board's legal & fiduciary obligation to oversee it), or they believe the maintenance fee is no different from paying rent (and then blow a gasket when the fee rises to cover costs -- THEIR OWN costs, of course). Explaining the difference calmly can make a world of difference to the board.

Steve, you call for something many people forget, "TRUST" in whom you elect. Many shareholders don't understand that TRUST is an important aspect of board representation.

A large % of participants' greatest problem seems to be placing "TRUST". For example, the increase of maintenance and assessment is seen as poor judgment. Mangers seem "INCOMPENENT" or "CORRUPTED." Superintendent are judged as "BEING LAZY", "TAKING ADVANTAGE", etc.

Well, with such attitudes or prejudices, "who can walk on water?" Obviously, being happy with management, the superintedent or a board means to understand their responsibilites and work scope and have specific measures to assess for their individual performances.

However, "TRUST" is important to build a good foundation. Boards should build trust by delivering their part: (1) business procedures that are sound and enforced in all areas by professionals and staff. (2) Open and honest communications with shareholders. (3) Taking the "hardball decision" when required. (4) SERVE above all since they were ELECTED at the PLEASURE of shareholders.

Once you have TRUSTING shareholders and boards who build TRUST the result will be a solid Co-op.

AdC

You're absolutely correct, AdC.

Trust is undeniably critical in leadership.

Most co-op shareholders need plenty of reassurance that the maintenance fees they pay are going to good use. (I'm assuming that a co-op is well run and without waste.) How many people balance their checkbooks? If that's too much hassle (I don't balance my own, I admit), then it's too much to ask that all our neighbors understand corporate finance.

Part of the solution is regular communication. Run-of-the mill stuff can go in a conspicuous public place. We find the elevator ideal for construction updates and whom to contact during the super's vacation.

Sensitive topics can go out in the mail, either from the property manager (a reminder to follow recycling rules) or from the board (explanation of new house rules).

All of these notices can help to remind people how their money is being spent (on the construction; on recycling fines; paying for someone to cover the super during his vacation).

Some boards go as far as allowing shareholders to attend a portion of the board meeting.

And always leave a phone number or e-mail address so residents can contact a board member. When they do, reply!

Trust goes beyond mere communications. In fact, I will disagree to what you proposed. HATE things posted on elevators to be exposed to visitors and potential buyers, letters from managers and the board as general reminders, etc.

When I wrote my message, I meant HUMAN TRUST and KNOWING function. Example:

When we go to the POLICE, we place TRUST in this enforcement body because it is our understanding that their BUSINESS PROCEDURES (enforcement procedures guided by the LAW or CODE) will lead to some GOOD (PREVENTION, CAPTURE, SURVEILANCE ETC.) so that ORDER is again imposed in society.

Thus, boards need to develop and/or review periodically its business procedures that will lead to some good. Sound procedures established and periodically reviewed by the board are translated in good management, good response from the employees, good admissions policies, etc. All of those things that chatroom visitors complain about here.

Apparently, there are many individuals that post messages here, i.e., Alice T, Big AL, etc. whose level of TRUST in the BOARD is minimal.

However, WHO WANTS TO RUN FOR A BOARD when the trust level is minimal? when Alice T is advocating in trying to collect e-mails from shareholders to blame board members? Isn't this what is happening today in US politics? Who trusts anyone when we are ready to accuse, get dirty laundry out, or not give a chance to anyone?

TRUST is key! Knowledge of the function is key for board members too. This is why I mentioned how board may also build TRUST:

1) Business procedures that are sound and enforced in all areas by professionals and staff.
2) Open and honest communications with shareholders.
3) Taking the "hardball decision" when required.
4) SERVE above all since they were ELECTED at the PLEASURE of shareholders.

FYI - Taking "hardball decisions" would be the most difficult. It translates for me, "I don't care if I am not elected again! I did what my conscience and fiduciary duty called for!!!" This is why I tell shareholders, "I never promised you a rose garden."


AdC

AdC is certainly on-target. And while I agree with him that trust must be created and maintained in many ways, I still believe that messages in public places can be one of those tools.

Using AdC's point about exposing visitors and potential buyers to building info, I suggest that boards do not post things about the latest vermin infestation, reminders that shareholders in arrears will be assessed fines, or notes telling people to pick up their dog's poop. That sort of thing should be done in personal mail.

On the other hand, notices about improvements -- "Painting in the hallways begins Tuesday morning" -- or upgrades -- "The workout room now has a new DVD player" -- or routine maintenance that affects residents -- "Hot water will not be available Thursday between noon and 4" -- can be an effective way to let everyone know what's going on. And when these messages promote good things (repainted walls, new equipment in the fitness room), they can help sell the building.

I agree it would be nice to Trust the board. But, we live in a real world, and personal agendas of Board members have almost ruined our building. And, because we began to REVIEW and QUESTION their decisions, in the last three years alone, we have saved ariybnd $100,000 by stopping work that the former Pres of the Board (and the man co) wanted to approve, but as it turned out -- was TOTALLY unecesarry.

The Forth Estate, as deemed by the founding Fathers of our nation -- is the Free Press. And with the Free Press we have Checks and Balances... And with our Emails (which were signed and there was no spying or whatever) or pititions, we became the Fourth estate in our building. With every layer the NEW board peels back, they find old problems that were never addressed. Avenues of revenue that were ignored for personal reasons or incompentence.

You are starting to sound like one of our Old board members who wanted to conduct secret meetings, keep the Board min secret and refuse to answer to any shareholder who questioned a decision or how THEIR money was being spent, and why a few Board members did not need permits for the renovations in their apartments.

No matter how much you may not like the Email Power, it was through Shareholders bonding together that we were able to change things.
ONE MORE THING: As for sneaking around and spying on the Board. We discovered that the IN-YOUR-FACE peition, and the signed, dated EMail Trail, was the best way to change things...As for finding people to run for the Board, after the Shareholders saw that we ould make a diffrienc, we have more than enough people running for the Board. And we replaced most of the old Board.

AliceT

I'm sorry to give you my impression of a co-op whose mode of doing "check and balances" is based on e-mails of shareholders being manipulated by one or a reduced number of individuals who may have well founded or not so well founded information on what is going on:

Just simple ANARCHY!!!

Perhaps the tactic worked well to remove an ineffective board, but once done, the co-op has to grow and new boards have a need, if not an obligation to construct SOLID TRUST on effective business practices.

In other words, the TIME OF TERROR is over!

AdC

If the Board is honest, and doing the right thing, than they should have no problem with sending out min or talking with SH, or sending Email varification.

There was no Anarchy, secret spying or whatever else you seem to think we were doing. We were direct, straighforward and the more we found out, the more direct and straight foward we became. And because over 80% of the SH (and one major sponsor) bonded together, sent SIGNED Emals and pititions etc,,, it was hardly a Time of Terror.

The Terror was for the Board members who had been in charge for so long, seeing thier power and the SH apathy dissapear were the ones who were terrified.

We, the Shareholders of our building, took our building back, in a very open and honest way. And its now on the road to recovry. Why do you so object to this? We do trust our new board. And the new Board members, having been on the other side, know the value of transparency and Email verification. The Board also has to TRUST the SH. We are a group of professionals, who care about our investment.

I have very much appriciated the business-like exchanges of information on Habitat, and at this point dont see that this is a productive exchange of information or ideas, so this is my last response to you on this subject.

Lately, this seems to be the trend as more and more people are "consultants" because of the type of the business environment. However, you should check your proprietary lease, your certificate of occupancy and speak with your co-op counsel in order to bring sense to these problems in which you have "mix use" of a residence.

AdC

Look at your occupancy agreement - and other corporate documents - ours state that the apartment can only be used for residential purposes - no businesses - besides which if you have central electric, water, etc - you the shareholders are paying for that persons additional use

you MAY have a business - we are in a coop in manhattan and there are shrink's ofices, architects offices, etc - not really much more traffic than the housekeepers. is this your personal agenda or is it really a problem?

Its really a problem when you only have one PA elevator for 100 apartments, and one business already had three employees, (started out as a single-home worker) And there are now three other SH who want to open employee/client-based business's. Home based business's are a growing trend, and as long as it only requires a ph, the internet and an occasional meeting -- no problem!

Four business with two employees or four clients a day, substancially increases the elevator usage and waiting time, not to mention the packages and deliveries...Also WHO are these people who spend more waking hours in the building than a sub-let or owner, they are not bonded and have not passed the Boards approval. We dont have the staff for signing in and out, so are they wondering around the building? Employees know our scheduel. And what about insurance.
The list goes on... The bottom line is that we bought into a CoOp, not a ConDo or rental... So, to say this is personal, is to accuse the majority of Sh in the building, who are tired of waiting for the elevator and disturbed by all the strangers, agree with this point of view. Bottom line, its also a very real safety issue.

Alice, I agree with the previous responses: First, check your proprietary lease to see what kind of businesses are permitted. (In our case, it's "professional" offices that don't have pedestrians from off the street walking in.) Even in the case of our medical office, the doctor's patients are prohibited from entering or waiting in the building's common areas (the doctor has a separate entrance to his office). These rules are in our proprietary lease, which all residents must follow.

Second, check the certificate of occupancy. This is on file through the city's Department of Buildings.

Third, check the zoning laws. But even if the city permits an office, that doesn't mean that your certificate of occupancy allows it. And even if the c. of o. doesn't rule out such offices, your proprietary lease may. Finally, check the house rules. While they are an extension of the proprietary lease, they may be more detailed than the p. l. and may have more information about such questions. Then again, the house rules may be silent on the topic. Still, worth a check.

Here's one of the bottom lines: If someone has a business in his/her apartment with clients coming in for meetings, who is liable if the client slips on the stairs?

I hate to always have to bring up a lawsuit, but we live in litigious times in a litigious city. The co-op must take reasonable steps to protects its investors (i.e. you & your neighbors) from avoidable expenses.

So I think you are doing the correct thing to check into the kind of offices permitted in your building.

As always thank you for the information. We are concerned about issue of insurance. Both clients and employees (this includes interns and part-timers) are our concern.

We are lobbying to have the house rules changed... No clients or employees... otherwise you can work in your apartment... Home-based businesses are becoming the trend,,, We hope that the house rules will be changed to avert this growing problem.. We now have three other owners who want to open busnesses in the building -- with employees and clients... We are a fairly small (75 units) building with only one elevator -- and if you start to add up the numbers of daily elevator trips of employees or clienst of five businesses...,, it quickly equals elevator gridlock....Thanks,,, AT...

Of course, each person who falls in a building premise will be a potential for lawsuits. Of course, it could happen to anyone, the nanny, the dog walker, the client or a visitor to a resident. Unfortunately, human beings stand on two legs and chances for falling are greater than four-legged animals when "strolling."

The main issue is could you run a business with employees or tons of disrruption in a residential aparmemnt. The answer is to be determined by the documents that you have agreed will cover the "USE" of occupancy and makes for taxes and assessed value of the property.

AdC