Page 1 - New England Condominium July 2022

The Impact of Litigation in Condos, Co-ops, & HOAs Do Lawsuits Damage a Community? BY DARCEY GERSTEIN Inflation, the Supply Chain, & Your Monthly Charges Condos, Co-ops, & HOAs Feel the Pinch BY A. J. SIDRANSKY July 2022 NEWENGLANDCONDO.COM 205 Lexington Avenue, NY, NY 10016 • CHANGE SERVICE REQUESTED THE CONDO, HOA & CO-OP RESOURCE CONDOMINIUM NEW ENGLAND For the first time in decades, serious inflation has reared its ugly head. Costs for nearly everything—including the goods and services needed to operate and maintain multifamily properties—are up an average of 10 percent. Some sectors, particularly energy, are up nearly 20 percent. Co-op corporations and condominium and home- owners associations are in the same boat as individual households, just at a larger scale. Everything is suddenly more expensive. The question is, how to pay for it? Inflationary Pressure Cooker “Inflationary pressures affect many aspects of the real estate industry, and it’s top of mind for co-op and condo owners, board members, and managers,” says Ajo Ku- rian, a senior vice president with AKAM Management, a real estate management firm based in New York City and Florida. “The results of inflation and rising costs are seen everywhere, from basics such as cleaning supplies, to labor costs—consider the recent 32BJ contract for building workers in New York City—and equipment and materials for capital projects.” Price pressures are amplified by ongoing global supply chain issues caused by the pandemic. Despite governmental efforts, those issues have been difficult to mitigate, and have been even further exacerbated by the war in Ukraine. “Frankly,” says Scott Wolf, CEO of Boston-based BRIGS Property Management, “we’re seeing more issues caused by the broken supply chain and the lack of available staff at vendor firms than The Year in Condo, Co-op, & HOA Law How Courts & Legislatures Are Shaping 2022— and Beyond BY DARCEY GERSTEIN Even though 2022 started off with a backlog of court proceedings and legis- lative sessions after months of COVID closures and related scheduling issues, a number of cases and bills of interest to the multifamily housing community have gone through or are in the process of being decided. Here are some that boards, managers, owners, and resi- dents should follow: NY Co-op’s Procedural Choices Hinder Its Damages Claim Attorneys Deborah Koplovitz and Andrew Freedland, partners in New York City law firm Herrick, Feinstein, write in the New York Law Journal of a recent ruling in a case involving Brook- lyn co-op Trump Village Section No. 4 and a shareholder it claims made mis- representations on his purchase appli- cation that caused the co-op to waive its right of first refusal and thus incur monetary damages. Koplovitz and Freedland point out that the substance and procedure of the claims that the co-op proffered might have played a role in the April 20, 2022 judgment for the defendant in the mat- ter of Trump Village Section No. 4 v. Gene Vilensky a/k/a Gene Vilenskiy by Justice Ingrid Joseph of the Supreme Court, Kings County. The case alleges that the defendant listed himself as the only occupant of the apartment he was applying to pur- chase in 2014, agreeing that any false information or omission of material information in the application could result in its rejection, revocation of its approval, or termination of the propri- Americans are a particularly litigious lot, believing as many of us do that we are endowed with the inalienable right to life, liberty…and the pursuit of recompense for any slight or wrong done to us, real or perceived. This tendency is unfortunately common in the nation’s condos, co-ops, and HOAs, where the ideals of communal living and shared ownership sometimes get overshadowed by grievance and strife. It’s no wonder, really; these are com- plicated properties containing multiple households with shared walls, common spaces, and governance—including an established set of rules, regulations, and covenants that are often selectively fol- lowed, unevenly enforced, or both. An ar- ray of entities contribute to their operation and upkeep, including managing agents, service providers, contractors, insurers, utilities, real estate brokerages, and mis- cellaneous vendors to name just a few, all overseen by a volunteer board—and all with a potential axe to grind. Above all, these are people’s homes, and often their largest investment, making for an espe- cially edgy environment. Emotions Run High in a High-Rise Attorney David Hartwell, with the law firm of Keough & Moody in Chicago, has seen the personal toll that lawsuits can have on a community. “There are a lot of emotions surrounding lawsuits,” he says, “especially when a resident names individ- ual board members instead of just suing the association as a whole.” Associations and co-op corporations are not nameless, faceless entities like other businesses that might find themselves on the wrong side of a subpoena. When a resident sues the board, notes Hartwell, they are bringing a legal action against their neighbors— neighbors who have volunteered their time and energy to govern the community. “If there is litigation between a resident and the board,” says Alison Phillips, vice president of multifamily and commercial for property management company First- continued on page 10 continued on page 8 with pricing increases due to inflation. Everyone is aware of inflation now, so it’s not a big surprise when you get the bill. Most are expecting it. The bigger issue for us is how long we’re waiting for necessary parts, equipment, etc., to be delivered. In addition to costs having risen, appliances are delayed and building materials don’t come on time. Asphalt, for instance, is much more expensive because it’s petroleum-based. Finding continued on page 8