New condominium, cooperatives and HOA’s must be mindful about time and rights against the sponsor. Statutes of limitations are the time that an association must bring a lawsuit to assert claims, before the claims become time-barred. It is often the easiest defense for a sponsor to end a lawsuit.
The 23-23 Condominium found this out the hard way by having almost all its action against the sponsor for construction defects, dismissed on a summary judgment motion. The Second Department explained that a “claim for damages arising from defective construction accrues on the date of completion of the work”. If the time limit for bringing the claim has expired, then the plaintiff is out of luck. Here is the decision in that case.
Lawsuits against sponsors can be complicated if not handled properly and some of them become newsworthy which can concern some owners. On the other hand, sponsors often do not want the publicity, especially if they are continuing to develop. For example, the media picked up on the “Hyde Midtown condo association alleges construction defects galore”, reporting that “Suit targets Related Group development entity and firms that built 32-story high-rise in 2018”. That’s not a typo. The condo was constructed back in 2018. It took over 5 years for the owners to organize and sue. The suit alleges 163 construction defects including “improper installation of materials on the roof is causing water to seep down several levels” and “balcony railings for some condo units were improperly installed”. Here is an article reporting more.
With proper guidance, owners can take control of their situation against a sponsor developer and its members and investors, and make sure that they meet their contractual and other obligations. Sponsors keep control of the association boards during the early years of the development in order to keep owners disorganized without central financial resources to make sure obligations are satisfied before sponsor profits from sales are dissipated. The time to bring claims, statutes of limitations, also must be closely monitored to make sure they don’t expire. Once expired, claims can be lost forever, and the responsible parties insulated from liability. Suing is not necessary in many instances. Amicable negotiation can lead to a resolution without litigation, provided that a sponsor is being reasonable. Sometimes litigation is the only course of action to achieve the condo and its owners’ goals. For the Hyde Midtown condo association, it took over 5 years to come to that realization. Organizing early with experienced representation is the key to success.
Local Law 18, also known as the “Short-Term Rental Registration Law,” requires owners and/or renters (hosts) who want to rent out their residential units for less than 30 days to register with the New York City’s Mayor’s Office of Special Enforcement (OSE) before doing so. This law should be a game changer for condo, coop and HOA boards that have been battling with short term renters in their buildings which prohibit short term renting. The NYC law also permits certain qualified owners, including association boards, to add their building to OSE’s “prohibited building list” to prevent any short-term rental of any dwelling unit therein. Airbnb, VRBO, Booking.com and other short-term renting sites will be prohibited from authorizing bookings for unregistered short-term rentals. Short-term rentals that are properly registered, still are only allowed in Class-A multiple-dwelling buildings if the host remains in the same apartment with his or her guests, and no more than two guests are allowed at a time. The guests must also have unfettered access to all of the rooms located in that apartment.
Beginning Monday, March 6, 2023, boards can start registering their buildings for the “prohibited building list.” Building owners and boards should visit OSE’s website to access the registration or the prohibited buildings list application. OSE’s final rules (Rules), which also go into effect on March 6, 2023, provide that owners, boards, and/or managers of buildings that submit a prohibited building list application.
The application is going to require the following information:
- The name of a natural person making the application;
- A working phone number for the applicant;
- An email address for the applicant;
- The address of the building the applicant seeks to add to the list;
- An explanation of the relationship between the owner and the applicant;
- Any proof or documentation requested by the administering agency to substantiate the request where the administering agency has cause to require further verification; and
- The applicant must also certify that leases and other occupancy agreements for dwelling units within the building prohibit short-term rentals.
To support such application requests, we suggest boards submit their governing documents which provide that short-term rentals are prohibited in their building and if it is not clear, a board resolution providing that such short-term rentals are prohibited.
In representing hundreds of condos, coops and HOA’s across New York City, neighboring construction impact is a regular concern. It can range from access and protection licenses for neighbors to perform construction projects to physical, sound or nuisance impact. The scariest situations can be the physical impact and that just happened at 10th Fifth Avenue and a row house at 12th Fifth Avenue after their neighbor’s building construction at 14-16 Fifth Avenue became dangerous.
It started with falling debris and the impact then manifested itself physically. Department of Building inspectors ordered the evacuation of the residents after finding signs of movement with cracks and separation on the facade of 10th Fifth Avenue.
If there is concern about neighboring construction’s physical impact on a building, bringing in the correct team of professionals quickly can be critical. A structural engineer can evaluate the situation visibly and perform invasive testing regarding structural stability if necessary. Having a baseline established to monitor against is very important. The neighbor should have been monitoring vibration and impact from an engineering perspective on its neighbors and there is likely liability in this situation for the damages that have incurred. Engineers often recommend vibration monitoring devices which measure vibration and can be set to issue alerts above a certain level so that the baseline that is established can be checked to see if the vibration has affected the building being monitored.
Having the right team in place to protect a building being impacted is not something that a board should wait to do. Boards should be concerned about these life, health and safety issues and have a fiduciary duty to look out for the best interest of their owners and residents. There are ways to try to get the neighbor to pay for or reimburse the building for these services but even if they aren’t willing to do so voluntarily, being proactive can avoid damage and in some instances save lives.
Here’s an article on what the DOB found at 10th Fifth Avenue.
The New York Department of State adopted NEW Regulations 182.2-182.11, which are standards relating to the performance of notarial acts. The regulations became effective as of January 25, 2023.
While the bulk of the regulations cover “electronic notarial acts,” there are provisions of the new regulations that pertain to all notaries, which everyone should be aware of.
All notaries are now required to maintain a “traditional” notary journal.
Some details:
· the journal must be maintained for at least 10 years
· it must be capable of being produced to the Secretary of State upon request
· transaction entries must be made contemporaneously with the notarial act and include the following:
1. the date, approximate time, and type of notarial acts performed;
2. the name and address of any individuals for whom a notarial act was performed;
3. the number and type of notarial services provided;
4. the type of credential used to identify the principal; and
5. the verification procedures used for any personal appearance before the notary public.
There are other requirements that apply to all notaries but of special interest is Section 182.5 (reproduced below), which sets forth the standards of proof a notary must obtain to confirm the identity of the person appearing before the notary (assuming the person is not personally known to the notary).
The NYC OSE has adopted final rules for Local Law 18 which coop, condo and HOA boards and their managing agents should become familiar. The rules cover the registration and requirements for short term rentals in NYC. But for coops, condo and HOAs that prohibit short term rentals, the rules provide a glimpse at the roadmap to registering their buildings with the OSE. This is a relief to boards of these associations which prohibit short term renting in their governing documents and have struggled with enforcement.
Section 21-09 of the rules covers the prohibited buildings list. The application on the OSE’s website seems to be opening for registration on March 6, 2023. The application will require the name of a natural person making the application, a phone number and email for the person, the address of the building, an explanation of the relationship between the owner and applicant and “any proof or documentation requested … to substantiate the request ….” The applicant must certify that the leases and other occupancy agreements prohibit short term rentals. The last requirement of “proof or documentation” is likely the more difficult one because we aren’t sure what the OSE will require. Associations that are professionally managed could have their managers make the application or it may be a board member doing so. The “proof or documentation” will likely be the association’s governing documents that prohibit or limit short term renting. For example, bylaws could say that rentals for less than a year are prohibited. We’ll have to see what the OSE requests and requires before adding an association building to the prohibited list.
The OSE plans to publish the list of prohibited buildings on its website and update it in real time. It is not clear if the OSE has a deal with AirBnb re making sure that it does not allow listings in buildings on the prohibited list. We’ll have to wait and see how this all pans out.
Here are the rules.
Under NYC Local Law 97 (Annual Greenhouse Gas Emissions), most buildings larger than 25,000 square feet must meet caps on their greenhouse gas emissions beginning in 2024 or face hefty fines. By 2030 and 2050 there are increasingly tighter limits. 2024 though is right around the corner and the NYC Department of Buildings has finally issued rules on how condo and coop boards can comply with Local Law 97.
Boards and their management should familiarize themselves with the DOB’s 26 pages of rules which gives guidance on complying with this looming legal requirement. Here is the final rule the DOB released.
What a way to wake up on Christmas morning. Happy holidays to all.
Robert Orr, president of the Las Brisas Condominium Association in Florida was arrested for the third time for installing hidden surveillance cameras in owners homes. I can understand the first time, but three times. Here is the article. Mr. Orr ought to hire himself a criminal defense attorney, but the condo association should put their insurance carrier on notice in case the victims decide to point their fingers back at that board for not taking action to remove President Orr after the first, then second arrest. Three times is a charm and perhaps the owners will take action if the board isn’t willing to do so.
Condo governing documents typically include a provision indemnifying board members for acting within the scope of their authority as board members. This conduct by Orr should fall without that indemnification, but one might ask what was the rest of the board doing after it learned about the first and second arrest for invading owners’ privacy and installing surveillance cameras inside homes without authority. If an association officer is accused for bad conduct like this, boards should consider whether removing the officer from his or her position is a good idea during an official investigation and resolution of the matter. Boards can change officers simply with a board vote. Boards have a fiduciary duty to all of their owners. If an officer is accused of installing cameras inside people’s homes, removing the officer is one of the first things a board should consider. Boards typically can’t remove board members themselves and need an owners’ vote to do so depending on their bylaws. Noticing an owners meeting for the owners to make a decision on board member removal may also be a good idea. In the end, the board is above any one member and if an officer acts improperly, the board should look out for the best interest of the entire community.
The appeals court which governs over Brooklyn, Staten Island and Long Island, just issued a decision holding that the Meadowbrook Pointe Homeowners Association, Inc.’s rule that dogs greater than 25 pounds can’t be on the association premises, was unenforcible and should have been done by an amendment to the HOA’s Declaration. That would have required a vote of 66 2/3% of the owners and then a recording of the amended Declaration against each of the HOA units.
The Second Department explained that:
[T]he plaintiff demonstrated, prima facie, that the board’s adoption of the house rule was not authorized by the condominium bylaws, and thus, the adoption of that rule was not protected by the business judgment rule (see Yusin v Saddle Lakes Home Owners Assn., Inc., 73 AD3d 1168, 1171; Strathmore Ridge Homeowners Assn., Inc. v Mendicino, 63 AD3d 1038). Since neither the condominium bylaws nor the condominium declaration of covenants, restrictions, easements, charges, and liens (hereinafter the declaration) contained any restriction on the size of dogs permitted on the condominium premises, the house rule constituted an amendment of a permitted use of the plaintiff’s unit, which, pursuant to Article X of the condominium bylaws, required approval by 66 2⁄3% of the homeowners at a noticed meeting, and an amendment to the declaration (see Gabriel v Board of Mgrs. of the Gallery House Condominium, 130 AD3d 482; Board of Mgrs. of Vil. View Condominium v Forman, 78 AD3d 628, 630).
Turan v Meadowbrook Pointe Homeowners Assn., Inc., 2022 NY Slip Op 07255
It is critical for boards to have experienced counsel analyze whether a rule change is sufficient or whether an amendment to the governing documents by an owners’ vote is necessary. Read the decision here.
Amending your governing documents isn’t always the easiest thing to do because it requires a vote by unit owners in condos and the proprietary lease in coops. An amendment to the governing documents is probably necessary for an e-bike ban, and can’t be handled by a board change to the condo’s rules and regulations or coop’s house rules. Opponents of the rule would argue that an e-bike ban is no different than a smoking or pet ban in a building which need to be done by governing document amendments. They would be correct that amending the governing documents makes it a certainty until the owners decide to change the governing documents again. Rule changes can be made by a board vote and thus when the board changes, the new board could easily change the rule. That’s not the case with a governing document change.
So what’s a board to do regarding an e-bike ban. If a governing document change is possible then the board could try that. If it imposes the change by a rule amendment by the board alone, it could be subject to challenge.
Condominiums that want to give exclusive use of common space to a particular unit owner, often use a license agreement to do so. Selling common space requires approval by unit owners and sometimes all of them voting in favor of a sale because all unit owners in a condominium owns a percentage of the common elements. Boards get around this hurdle by using a license which is a legal instrument that has to be carefully drafted in order to comply with the law and avoid all sorts of problems for the condo.
A new case filed in the New York State Supreme Court in Manhattan shows how the devil is in the details of these license agreements and choosing specific wording in them can be problematic. In MGP 1011 LLC v. Condominium Board of The Citizen 360 Condominium, Index No. 654809/2022, the complaining plaintiff (identified as Mallory G. Parker, the sole member of the LLC in the complaint) bought a condo apartment in the defendant 82 unit condo from a prior owner who bought from the sponsor. The sponsor sold purchasers the exclusive use to parking spaces ($150k a space) and storage lockers as ancillary amenities, which were memorialized in license agreements by the sponsor controlled board to those unit owners. Parking spaces in the condo were licensed by the condo (because they are common element) to the unit owners.
In the license the condo specified that “Parking Spaces will be able to accommodate automobiles with a maximum weight of approximately 6000 lbs. and with maximum length of approximately 17 feet.” The condo could have left out that detail from the license, but didn’t. Well, Ms. Parker’s LLC bought a condominium unit from owners who bought the unit from the sponsor along with a license for a parking space, and is complaining essentially that the condo breached the license agreement because her Acura RDX SUV which is 3783 lbs. and 15.5 feet doesn’t fit in the parking space she licensed.
I am sure that the condo will defend the case or figure out a way to settle it, but one lesson from the dispute is that condo boards have to be very careful in crafting license agreements. Words really do have meaning and sometimes, like in the Parker – Citizens 360 Condominium dispute, it’s better not to use them at all and at other times being very specific it important. Here is the complaint for inquiring minds.
