New York's Cooperative and Condominium Community

Habitat Magazine Business of Management 2021




Hot Topic: Who Pays When a Cooling System Fails?

Ron Egatz in Building Operations on September 14, 2017

Peekskill, Westchester County

Draw the Line

The Peekskill Art Lofts, where an air-conditioner replacement was in dispute (photo by Michael Towns)

Sept. 14, 2017

Under most co-op and condo governing documents, shareholders and unit-owners are responsible for repairs to appliances inside their apartments’ walls. What happens when a shareholder believes the co-op is responsible for a repair, but the board, management, and attorneys believe otherwise?

Throughout this past summer, teams of HVAC contractors serviced several of the central air-conditioning units in the small Westchester County artists’ co-op where I live and serve as board president. Our 28-unit co-op was built in 2002, and many of our 28 central AC systems have reached the end of their lifespan. I’ve been following the changing federal regulations on coolants – today’s most widely used freon, R-22, will no longer be available starting in 2020. With these looming changes in mind, I’ve been advising my fellow shareholders on the merits of continued maintenance versus total unit replacement. 

Sally, a shareholder and artist, had a more clear-cut problem. Her original central air-conditioner failed. Estimates to replace the unit were around $5,600. If the contractor needed to replace lines in the wall, the price would jump by $1,200. Sally wrote to the board and our managing agent with detailed accounts of her situation, cost estimates, and work progress. 

A contractor informed Sally there might be a freon leak inside the wall. This was going to be expensive. Sally wrote to the board with the understanding that the co-op is responsible for leaks and other problems occurring outside the walls of her apartment. 

Our bylaws, however, state: “The Lessee [shareholder] shall be solely responsible for the maintenance, repair, and replacement of all lighting and electrical fixtures, appliances, and equipment, and all meters, fuse boxes or circuit breakers and electrical wiring and conduits from the junction box at the riser into and through the Lessee’s apartment.” 

With the summer heat mounting, Sally went ahead and paid to replace her aging air-conditioning system and have a new line run into her loft. As she sought reimbursement from the board, correspondence was traded between Sally, the board, the co-op attorney, and our managing agent. Eventually, the board and its professionals determined that the only way to approve reimbursement would be if Sally provided proof that the line inside the wall was damaged, which caused the freon leak. Further, we discovered that opening a wall to verify this claim would be at least as expensive as running a new line. With no proof of wrongdoing by the co-op, the matter was closed, and Sally was stuck with the bill to replace her failed unit and install the new line. 

The board took no delight in Sally’s predicament. Though several other shareholders have replaced their failed central air-conditioning systems, no one had claimed the failures were the co-op’s fault, or that the co-op was responsible for replacing the systems. We learned that it pays to research the co-op’s governing documents, and that all claims have to be backed up by physical evidence. It was a valuable lesson.

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