CONDO GOVERNING DOCUMENTS, P.2

Lobby Renovation

Many condo bylaws contain restrictions on the amount of money a board may spend on capital improvements and non-emergency capital repairs (i.e., roof or façade repair) without first having to obtain unit-owner approval (usually a simple majority). Accordingly, even if the lobby hasn't been redecorated in 25 years and its furniture is in tatters, if the cost of renovation exceeds the threshold amount that the board is permitted to spend,  then you're going to have to call a special meeting of unit-owners and obtain their approval for the expenditure.  The steps for calling a special meeting are also in the bylaws.

If there's no set limit on the amount, you'll need to consider how to fund the project. Are the board's capital reserves sufficient to cover the expense? If so, what will be the plan for replenishing the funds? Will there need to be an assessment and, if so, for how much and for how long?

Before engaging in any major capital project, a prudent board will consult with its managing agent and possibly its accountant for input on how to fund the project. If there is any question as to whether unit-owner approval or some other procedural step may be required before starting the project, you should also consult the condominium's counsel.

Sale and Leasing of Units

Unlike the sale or sublet of a co-op apartment, which is subject to the approval of the board, a condo board is far more limited in its ability to "reject" the sale or leasing of an apartment.

With regard to sales, most condos provide the association with a right of first refusal, which must be exercised within a certain period of time after the unit-owner gives the board notice of his/her intention to sell. In other words, the only way a board can "reject" or otherwise block a sale from proceeding (assuming proper notice is given) is by having the condominium association itself purchase the unit on the same terms and conditions as the prospective sale. The "waiver" of the condominium's right of first refusal must typically be exercised within a specified period of time (i.e., 30 days), or else it will be considered waived.

Needless to say, the exercise of the right of first refusal is no easy feat to accomplish and, indeed, many governing documents require that a board must obtain the approval of a majority or even supermajority of unit-owners before exercising the condo's right of first refusal.

Similarly, other than limitations on certain short-term leases (i.e., less than six months), a condominium unit-owner enjoys a very broad right to rent his or her apartment, so long as the board is notified in accordance with established procedures and is offered a right to rent the unit on the same terms and conditions. Again, a board that fails to act on a rental application within the time frame specified by the governing documents will usually be deemed to have waived its rights in this matter.

A prudent board will require that a potential buyer complete a purchase application containing some information about the proposed purchaser/tenant, and will review such "packages" and assent to the condominium's waiver of its right of first refusal.

These are only a few of the myriad issues you will confront during your tenure on a condo board. Issues regarding unit-owner disputes, alterations, capital repair projects and governance-related matters are also likely to rear their heads.

In each of these instances, your first stop for guidance should always be your governing documents.

Robert Braverman is a partner at Braverman & Associates.

Illustration by Liza Donnelly 

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