Does our co-op board need to relocate shareholders while the façade is repaired?
Transparency with residents will be important, as well as offering shareholders choices about their living arrangements while the work is being done.
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The brick façade of our co-op building has deteriorated. An engineer says residents should be relocated while repairs are carried out because support structures must be placed in the apartments. However, shareholders would still have use of their bathroom, kitchen, and sleeping areas if they remained. What is our responsibility here?
“A co-op’s governing documents outline the responsibilities of a shareholder to provide access to their apartment if repairs are needed and also the obligations of a board in providing an apartment with safe and livable conditions,” says Steven Wagner, a real estate attorney at the Manhattan law firm Wagner, Berkow & Brandt who represents co-op and condo boards and owners.
However, while the proprietary lease requires shareholders to provide access to their apartments if repairs are needed, putting in shoring to retain the facade from the interior of the apartment is a lot more intrusive than simply providing access. “The temporary support provided by shoring will likely be very inconvenient and involve heavy supports and large wooden sheeting,” Wagner says.
Provisions of the governing documents
Another provision of the proprietary lease is that the tenant has a right to what’s called “quiet enjoyment” of their apartment as long as they pay the maintenance charges. Wagner says, “the traditional definition of quiet enjoyment is that the shareholder should be allowed to enjoy possession of the apartment without interference by the landlord.” He adds that over the years, the courts have expanded the meaning of quiet enjoyment such that a shareholder’s living space should be free of excessive noise.
“Occasional inspections and repairs by the landlord are permitted under most leases, but extended interference with a tenant’s right to quiet enjoyment is not permitted,” Wagner says.
In addition, if a significant portion of the apartment is used for shoring, it could be seen as a partial actual eviction or a constructive eviction—terms used to describe situations where tenants can no longer access their apartments or the conditions in the apartment make the space unusable.
Liability considerations
The proprietary lease addresses damage to the apartment or building. “It is very specific as to repair obligations to an apartment when it is damaged as a result of a fire or other event covered by a liability insurance policy,” Wagner says.
If the repairs being made are a result of ordinary deterioration as a result of erosion, it will not be covered by insurance. However, as an additional consideration, the co-op’s insurance should be checked to see if there is any claim for rent loss that may be made.
Regardless of coverage, this will require negotiation with the shareholders in order to avoid claims against the board and to make up for the complete disruption of their lives.
“If the tenant-shareholders affected by these repairs are unable to use their entire apartments or if they need to move, the co-op has to abate the rent and may be responsible for damages related to the breach of quiet enjoyment,” Wagner says.
Transparency with residents
“A frank discussion with the shareholders is probably the best course of action,” Wagner says. He suggests offering residents some options. They could take a rent abatement in varying amounts, depending on the loss of use of the apartment and how bad the conditions are.
Alternatively, if the contractor is doing serious work to the façade outside of the shareholder’s apartment, rendering it uninhabitable, the co-op should offer to put them up in a hotel or give them an allowance to find alternative housing for the period of time until the work is completed.
You can offer the residents choices but also be specific about what is being offered. Some residents may choose to stay in their apartments with a maintenance abatement, others may go to visit friends or family, or take a vacation, and some may decide to go to a local reasonably priced hotel.
“These offers are not made because the co-op is absolutely obligated to make them, but because it is the right thing to do for neighbors and shareholders in order to avoid claims and unhappy shareholders who are rightfully upset with the disruption of their lives particularly during the pandemic,” Wagner says.
Considerations for condos
If this scenario unfolds in a condo, the advice may differ. Often, in condo buildings, the exterior walls are considered part of the apartment so this would change the dynamic of the situation. “This would require a careful look at the governing documents to determine liability,” Wagner says.
In addition, the concept of quiet enjoyment is a leasehold concept for tenants, not a deeded right for property owners, although Wagner says some courts have treated condos and co-ops the same. “They have applied some leasehold concepts to condos, saying they don’t see why the form of ownership should change the rights of the residents from one building to the next,” Wagner says.
While it's more complicated to give a general rule about the steps to take in a condo, Wagner points out, the decent thing to do would be to accommodate the condo owners in a similar way to co-op shareholders.
New York City real estate attorney Steven Wagner is a founding partner of Wagner, Berkow, & Brandt, with more than 30 years of experience representing co-ops, and condos, as well as individual owners and shareholders. You can submit a question for this column or if you’d like to arrange a free 15-minute telephone consultation send Steve an email or call (646) 780-7272.
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