The Board Room: How to "sell" a hallway

Converting common spaces to private use isn’t an everyday occurrence in a co-op or condo, in part due to political and legal complexities.

But when it comes to hallways, many boards will consider letting residents who’ve combined two apartments annex a portion of the hallway into their apartment to provide a unified entryway—so long as the space is at the end of the hallway and its disappearance will not affect other apartments on the floor.

1. Condos are more complicated than co-ops

In a co-op, the corporation owns all common spaces including hallways and so the board will generally have the authority to sell a piece of hallway outright to a resident. But in a condo, unit owners each have an undivided interest in the common spaces. A sale would require consent of all owners, so the right to annex a portion of the hallway is almost always licensed instead. 

Typical license terms include:

• The unit owner must promise to indemnify the condo association against any damages that arise from use of the space (such as a slip-and-fall lawsuit)
• The building will have unfettered access to the space to perform necessary work and won’t be responsible for restoring any finishes
• The unit owner must keep current on common charges and other fees

2.  Approval is a privilege, not a right

Boards usually have no obligation to sell or license common space. However, some governing documents say that when the request involves contiguous apartments and won’t impact neighbors, the board can’t unreasonably withhold approval.

3.  A revenue-raiser? Not really

What price to charge is usually up to the discretion of the board.  Some boards will look to  the fair market per-square-foot value of the apartment using comparable recent sales in the building.  In addition, licensing agreements sometimes contain escalation clauses which might be tied to increases in the Consumer Price Index.

Usually, the sale or license of hallway space is not a revenue raising tactic, as the actually square footage is so small.  That said, some boards in buildings that value uniformity in their hallways do charge considerable premiums—up to five figures in very high end buildings—to discourage requests.

Unit owners are typically responsible for the legal fees of both sides in drafting and negotiating the license or sales agreement.

Scott S. Greenspun, Esq., is a partner at the law firm of Braverman & Associates, specializing in the representation of New York City co-op and condominium boards.