NEW YORK CITY

In this second of two installments, leading real-estate attorneys answer more condo and co-op board members have been asking about what's expected of them and of shareholders / unit-owners in the terrible aftermath of superstorm Sandy.

In the aftermath of superstorm Sandy, many condo and co-op board members have been facing unprecedented challenges, with little experience to guide them.  In the first of two installments today, three leading attorneys answer eight questions at the top of every affected board members' mind.

Politicians and others called today for FEMA grants to be made available to residential cooperatives, which the federal agency characterizes as a form of business and so ineligible for emergency housing help. Yet the statements specifically excluded condominium associations, and failed to make clear that co-op and condo residents already are eligible for grants.

An elevator modernization project generally takes six to eight weeks to complete. That means the elevator will be out of commission for the entire time – and that doesn't include the period when you are waiting for an inspection by the city. However, a building can shave two or three weeks off the timeline by requesting an expedited schedule. "If you can afford to pay the premium, do it. Even for buildings with multiple elevators, having to wait longer drives people crazy," says Bram Fierstein, president of Gramatan Management.

As New York City prepares to issue its annual property-tax bills this month, the State's promised extension of the expired co-op / condo tax abatement remains in limbo. And a report issued today by the New York City Independent Budget Office — based on current legislation in Albany intended to equalize tax burdens between co-op / condo owners and standard homeowners — shows tax inequality will continue even presuming legislation is passed.

The president of a roughly 160-unit Long Island co-op complex is incredulous. “There’s a website where you can buy a kit that ‘certifies’ your dog as a companion dog. It comes with an ID, looks very official, it has a little vest for the dog so it mirrors a service dog” like trained seeing-eye dogs. “So you call up, say I’d like to get my pet certified, fill out the form, send in the check. Do I need documentation? ‘No.’ So anyone can do it? ‘Yeah.’”

When it comes to refinancing a co-op's underlying mortgage, your building's overall debt burden is just one aspect of the financial profile that a loan officer looks at. There are other, perhaps more significant, factors. For example, a history of balanced budgets would show prudent fiscal planning, while frequent operating losses could signal poor financial discipline. Minimal shareholder arrears would indicate strong collection policies, but large and/or persistent delinquencies would raise serious concerns. What else?

John W. Toothman, president of Virginia-based firm The Devil's Advocate, which advises housing associations nationwide on ways to lower legal costs, says condo and co-op boards should treat attorneys no differently than how they treat other contractors who are seeking employment: they should be subject to competitive bidding. That doesn't just mean getting a schedule of hourly rates for partners and associates (although that's part of it). You also want to examine the financial arrangements.

We represent a condominium on the Upper East Side of Manhattan. One of its units was unoccupied, with no common charges paid for more than a year and a mortgage that was for more than its market value. 

The first mortgagee — the lender — has a first lien on the unit ahead of the condominium (unlike with co-ops, and something the condo community should strongly lobby to repeal). So, if we were to foreclose the condominium lien for the outstanding common charges, the result would be that after protracted and expensive legal proceedings the lender would receive all of the foreclosure proceeds. That would leave no reimbursement for the condominium of either its arrears or its legal fees.

In a large co-op we represent, a shareholder purchased a penthouse unit and applied for the board's consent to gut-renovate it. All parties were aware that there were sporadic roof leaks into the unit at that time. The co-op board agreed to make repairs prior to the start of construction. The roof was patched and the unit-owner did the renovation. Then the rains came….