New York's Cooperative and Condominium Community
Jon Kolbrener in Board Operations on April 25, 2013
This statute has a long history, dating to the early 1900s. At that time, construction workers often faced perilous working conditions and sustained serious debilitating injuries. They had no means of obtaining compensation since the parties at fault were often undercapitalized and uninsured. In order to make them accountable, the Labor Law placed the responsibility on owners and general contractors. It was believed that they were in the best position to provide a safe workplace.
The statute does not apply to the owners of one- and two-family houses or to individual co-op shareholders or condo unit-owners. But corporations and the boards that represent them are potentially liable, and unless they have insurance, they will incur legal fees after hiring a lawyer to defend the case. These fees are not recoverable, even if the case is dismissed.
An Appealing Decision
Condos, however, are not liable, at least for now In its December 2012 decision in Guryev v. Tomchinsky, New York State's highest court barred all claims by a worker injured during construction in an apartment at a condominium. This decision is good news for condominium unit-owners, boards, and managing agents. However, it may be undermined in the future. For this reason, the better practice mandates careful planning before an accident occurs.
In Guryev, the court considered a claim by a construction worker who suffered a serious eye injury while working at a unit-owner's apartment in a new condominium. The suit was filed against the couple that owned the apartment, the condominium, its board, and the managing agent. Claims were asserted under various theories, including a provision of the Labor Law.
The court threw out the case. The claims against the individual unit-owners were barred for the reason discussed above (i.e., the exemption for one- and two-family homes).
The court then focused on the role of the board and the managing agent in order to determine whether they could face liability as an "owner" under the terms of the statute. It found that none of the entities had sufficient involvement in the work to be liable. In doing so, the court looked at the alteration agreement. Even though the agreement entitled the board to (1) authorize or reject the plan, (2) approve or veto the proposed contractors, and (3) subject the plan to review by an architect of its choosing, the court concluded that the board lacked sufficient authority to direct and control the construction work in order to impose liability under the statute.
Approach with Caution
Although the Guryev decision is favorable for condominiums, it should be viewed with caution. Its net effect is to deprive an injured construction worker of any remedy (other than the limited funds available under the Workers Compensation Law). For this reason, it would not be surprising to see future efforts to undermine this decision, including legislative steps to address the matter.
To be safe, read Part 1 of this article, "What Co-op Boards Need Know to Be Protected Under the Scaffold Law," and follow the common-sense advice the type and level of insurance coverage your condominium should have and what contract provisions you should include.
Jonathan Kolbrener is a partner at the law firm Braverman Greenspun.
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