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A co-op board was being sued by a shareholder over possible mold in the shareholder's apartment. The shareholder had a daughter who, unfortunately, suffered from a terrible disease and was forced to use a wheelchair. The board members asked my advice; I suggested that they inspect the apartment for mold. They found mold, but not the dangerous kind. The shareholder's mold consultant disagreed, and the shareholder pressed the litigation vigorously.

The decision to pursue legal fees incurred by a board when a co-op shareholder or condo unit-owner defaults often becomes a larger problem and greater issue than the default that originally precipitated the lawsuit. Here are three cases that illustrate the point

Mold in Apartments: Why Boards Should Address It Quickly

Written by Marc H. Schneider on November 29, 2012

New York City

The board of a co-op our firm represents was advised by a shareholder that there was mold in the apartment. The board did not believe there was mold and believed the responsibility to repair any such mold and the other damages in the apartment was not the co-op's responsibility. Ultimately, since the co-op board was not responsive to the shareholder, the water damage worsened and the mold continued to grow. The shareholder ultimately filed a lawsuit against the co-op due to the board's  unresponsiveness.

A condominium unit-owner complained of leaks in various areas of her apartment over a period of three years, and each time, the condo association's management company hired a contractor to repair the leak. However, the condo board refused to pay for repairs within the unit. Ultimately, the owner hired a mold-testing company, which reported mold in the apartment, including on her furniture, as well as on the exterior of the building. The owner replaced her furniture, remodeled her kitchen and demanded that the board reimburse her those costs and clean the mold from the outside of the building.

A cooperative retained a contractor to perform interior renovations. During the course of the project one of the shareholders claimed to have been made sick as a result of purportedly noxious fumes created by the work. The co-op board filed a claim with its general liability carrier who, in turn, requested to see the contractor's certificate of insurance. That's when the trouble started.

Hundreds of thousands of New York City co-op and condo owners may have avoided a bullet this week, according to a report that the City will honor a tax break State legislators promised in July but did not enact. The City, however, has made no official announcement, and politicians are calling on Governor Andrew Cuomo and Mayor Michael Bloomberg to take action and ease the uncertainty.

Recently, one of our boards left the annual meeting somewhat shell-shocked. How could things have gone so wrong? In this co-op, there had never been a contested election, and so the board had not thought to involve counsel in the election process or review that process with counsel. However, now the board found itself not only in a contested election, but also one in which cumulative voting was used to elect members of an opposition group.

The governing documents for all condominium buildings in New York provide that unit-owners may not bring about “nuisances” or “disturbances” to the building and to other unit-owners. We represented a condominium building in which one of the unit-owners was a hoarder. The unit-owner was elderly and had been using his apartment solely to hoard personal items for over a decade. The condo board was aware of this and neglected to address the issue until vermin began to circulate through the building and tear holes in the wall of the unit. Leaks soon began occurring in the unit as well. The unit-owner did not live in the building and was not easily accessible.

To rewrite the old saying, there are not only two certainties in life, but three: death, taxes and shareholder / co-op board apartment-alteration disputes. 

Shareholders are too often self-interested and push alterations beyond the scope approved by the board. That was the recent experience of one of our co-op boards, whose cautiousness throughout the alteration process is a good example of how a board can effectively position itself to defend against alteration disputes when they inevitably arise.

As a board member, I think a call should go out to New York City co-op and condo boards for great ideas that buildings left without power came up with to help cope with their situation. Superstorm Sandy hammered home the point that every board ought to have an emergency preparedness plan. Your ideas will inform such plans and enable us all to be better prepared.

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