Page 6 - New England Condominium July 2019

6 NEW ENGLAND CONDOMINIUM -JULY 2019 NEWENGLANDCONDO.COM M any co-op shareholders and con- do unit owners arrive in their respective communities after a history of living as renters. Often they carry with them certain ingrained assumptions and expectations from having lived under a landlord. These assumptions can cause fric- tion – because while the board of a co-op as- sociation and/or its management company may take on some responsibilities similar to those of a landlord, these are very different entities operating under distinct mandates. “Some people definitely don’t understand the boundaries between what they’re respon- sible for and what the association should handle,” says Bob Keegan, President with Dirigo Management Company in Portland, Maine. “They think they buy a unit, pay a monthly fee, and everything is taken care of. They’ll call us with an issue that doesn’t fall under management purview, and we’ll offer to send somebody over, but let them know that it will be at their expense. And they’re mystified because they pay that fee. So we’ll have to explain \[that\] when they bought their unit, they signed off on a whole bunch of documents explaining the delineation of responsibilities between individuals and the association. Of course, when you’re closing on a home, you don’t necessarily read all of those docs with the keenest eye, but you have to learn eventually.” As far as recurring complaints that actu- ally fall to the owners, Keegan cites things im- mediately outside of a townhome unit, like a light or doorbell. “Those items are powered via the owner’s meter box,” he says. “It may exist outside of a unit, but these are not com- mon elements.” Compared to the multifamily markets in places like New York and New Jersey, condos and HOAs in New England reign supreme while co-ops are more rare. But this doesn’t stop owners there from having unreasonable expectations for their board or managing agent as well. In New York, some of the distinctions be- tween co-op boards and rental landlords are laid out via the “warranty of habitability,” or New York Real Property Law Section 235-b. In short, because co-op shareholders occupy their units under a proprietary lease, they fall under the protection provided by the war- ranty of habitability that requires that the property be maintained in good repair. This means that the board may, for example, be required to repair interior walls and ceilings within shareholder apartments. On the other hand, courts have ruled that co-op boards are not responsible for ev- ery amenity that would be covered under a typical landlord/tenant relationship. Much of this is subjective and is decided by the courts based on how a co-op board’s failure to maintain, repair or service a building ele- ment adversely affects the health and safety of residents. Also, the warranty of habitability only ex- tends to shareholders who reside within their apartments. Thus, a sublessee cannot claim damages against a co-op board for failure to maintain a standard of living, but he or she can claim damages against the shareholder renting out the apartment. That shareholder (who is legally the sublessee’s landlord) would then have to file a cross-claim against the board if the shareholder feels that the board has in some way abdicated its duty to uphold the maintenance and repair of some element. Kevin R. McConnell, a partner at the law firm of Himmelstein, McConnell, Gribben, Donoghue & Joseph LLP in New York City, weighs in further on these distinctions. “Ap- proximately four decades ago, an appellate court affirmed the applicability of the war- ranty of habitability to co-op apartments and proprietary leases,” he says. “The typical rem- edy for a breach of the warranty is for a ten- ant to be provided a rent abatement, which affects the landlord’s pocketbook in a typi- cal rental situation; in a co-op situation, the pocketbook of the apartment corporation is being hurt. The difference there is that if the apartment corporation is acting as it should be in that maintenance is used to pay oper- ating expenses, then the loss of any mainte- nance payments through an abatement af- fects the other tenant shareholders. But an abatement of rent is often the most effective means of getting the apartment corporation to address a repair that has caused a breach of warranty. “Yet another method for getting repairs done is for a tenant-shareholder to com- mence an HP action,” McConnell continues. “The HP action is a tenant-initiated lawsuit in which the tenant-shareholder sues the apart- ment corporation in housing court, seeking a court order to do the necessary repairs. The tenant-shareholder can still pay maintenance such that the cash flow to the corporation is not interrupted.” Outside of the legal jargon, there are other scenarios wherein co-op residents expect boards or managers to be their super, care- taker, boiler technician, etc. Understand- ing the boundaries between where a co-op resident’s responsibilities lie and where the board’s or manager’s begin is essential to suc- cessful cooperative living. Read the Fine Print Occasionally, a misunderstanding be- tween resident and board/management will occur due to the former’s failure to fully un- derstand the bylaws of the association. This can be avoided by – you guessed it – actually reading one’s bylaws. “Sometimes in our business, repetition is key,” says Susan Fitzpatrick, Director of The Residences at The Ritz-Carlton, Westchester in White Plains, New York. “So we promote the bylaws of our association repeatedly. Manager, or Landlord? Understanding the Scope of Management Responsibilities BY MIKE ODENTHAL ISTOCKPHOTO.COM BUDGET & FINANCE continued on page 18