Boards

Property managers, take heed! A recent court case highlights the power you have to protect your associations when a neighboring building owner does not cooperate in giving a license for protection on their property so that the association can perform its work . In this case, the court awarded a license fee and mandated typical insurance, but did not reimburse the unneighborly neighbor for any additional professional fees or costs and did not grant any other consideration for the license.

The Case of the Unneighborly Neighbor

The specifics of the case may vary, but the core situation is this: Building A requires repairs to its facade, and in order to do so, Building A has to install protection on Building B’s property to protect Building B. Here’s where the trouble begins.

Building A ideally seeks a license agreement with Building B, allowing the repairs to proceed with clear terms for access and consideration if the access is really intrusive. However, if Building B proves uncooperative and refuses such an agreement, Building A is forced to go to court to obtain a court-ordered license.

The Burden of Proof Lies with the Repairing Building A

It’s crucial to understand that the burden of proof lies with Building A, the entity seeking the license. In order to obtain the court-ordered license, Building A must demonstrate:

• Necessity of the Repairs: The court needs to be convinced that the repairs are essential and cannot be performed without protecting Building B’s property.
• Minimal Encroachment: Building A must show they have minimized the intrusion onto Building B’s property as much as possible.
• Security Measures: A plan outlining how Building B’s property will be protected during the repairs needs to be presented.

The Unforeseen Costs of Uncooperativeness

Building B’s refusal to cooperate may backfire. While they avoid granting explicit permission for the protection, they also forfeit the opportunity to negotiate a potentially favorable consideration package. It’s generally better for the parties to negotiate an out-of-court license than to leave it to a Judge to make a decision on the license terms and consideration. The court, in its decision, may not consider reimbursing Building B for its signifiant attorneys fees incurred regarding the matter. In the case, Building B was looking for up to a $10,000 reimbursement during negotiations which was dwarfed once litigation started. Building B walked away with no reimbursement by the Court.

The Takeaway: Cooperation is Key

This case serves as a cautionary tale for both parties involved. For property managers, it underscores the importance of pursuing clear agreements with neighboring property owners before embarking on facade repairs. For uncooperative neighbors, it demonstrates the potential financial burden of refusing a reasonable license agreement.

By fostering open communication and seeking mutually beneficial solutions, property managers can avoid the hassle and expense of litigation, ensuring a smoother and more cost-effective repair process for everyone involved. It is critical to bring in experienced counsel early on in the license process in order to facilitate negotiations and if necessary, bring the neighbor to Court. The Matter of Board of Managers of Ariel Condominium v. Broadway Metro Association, L.P. case gives, associations that require a license from their uncooperative neighbors, another tool in their arsenal for compelling the neighbor to be neighborly. Read the decision here.

Condominiums have a contractual duty to maintain common elements. While the business judgment rule normally protects condo board members from personal liability if their choices seem unwise, it won’t shield the condo if the board breaches its contractual obligations to owners. Boards who neglect these responsibilities could open the condominium up to significant liability.

The Case: 580 Llorrac St. Corp. v. Board of Managers of 580 Carroll Condo.

In this case, a condo unit owner suffered water damage to its unit for several years due to the board’s failure to promptly repair a common element – the building’s facade. The owner repeatedly alerted the board to the ongoing water infiltration. Expert reports confirmed that the damage was directly caused by the degraded facade.

Despite this, the board took over a year to even investigate the source of the leaks and delayed repairs for yet another seven months. The court ultimately ruled this was a breach of the condo’s bylaws, which contractually obligated the board to maintain common elements.

Key Takeaways for Property Managers & Boards

• Common Element Maintenance is Crucial: Condo boards can’t avoid their responsibility to repair and maintain common areas. Ignoring issues will likely lead to greater damage and potentially, lawsuits.
• Promptness Matters: Contractual language often calls for “prompt” or timely action. Boards may be liable if they delay repairs without a reasonable justification.
• The Business Judgement Rule Has Limits: Boards usually enjoy protection under the business judgment rule, meaning courts won’t second-guess their decisions. However, this rule does not always apply.
• Mitigation of Damages: Unit owners have a duty to mitigate (minimize) damages to the extent possible, but failure to do so won’t completely bar them from suing the condo over breach of contract.

How to Protect Yourself as a Board or Property Manager

• Know Your Bylaws: Thoroughly understand your condo’s bylaws and governing documents, outlining your specific obligations regarding common areas.
• Act Reasonably Prompt on Reports: Don’t drag your feet when unit owners report leaks or other damage that might relate to common elements. Investigate promptly.
• Document Your Process: Keep meticulous records of all reported issues, investigations, the decision-making process, and contractor bids. This can help if a disagreement arises.
• Consult Experts: If in doubt about the technical aspect of a problem, get advice from professionals like engineers and building inspectors.

Here is the 580 Carroll Condo Court decision by the Supreme Court in Brooklyn, New York.

Recent reports about social media trends encouraging individuals to exploit “squatter’s rights” laws are raising concerns for property owners. It’s crucial to understand this complex issue and proactive steps landlords and associations can take.

The reason is a legal loophole that gives would-be trespassers the right to stay in possession if they only stay in a property long enough to claim legal residency — otherwise known as “squatter’s rights.” In New York City, it’s only 30 days of living at a property.

So a homeless migrant just has to stay below the radar for 30 days and then the property owner has to take them to Court to have them legally removed. The process can be complicated and takes a long time. Unlike a known tenant, the squatters are anonymous in most cases and have to be served and then usually they won’t show up in Court. After multiple adjournments which the Courts routinely afford tenants who don’t appear, a property owner will get a default judgment of possession and eviction. Then, a lockout by a marshal has to be scheduled and occur. If the squatter shows up in Court and argues against the eviction, they might be able to steer the proceeding to a trial which adds time to the process. It is extremely frustrating to property owners and now influencers are trying to rally migrants to find abandoned property and squat to take advantage of our system which protects people who trespass and take possession of the property of others.

Proactive Steps for Property Owners

• Regular Monitoring: Frequent inspections of vacant properties help identify potential squatters early, before they establish strong legal claims. With all the news around this issue, if you have a property, get to it quickly now and make sure you aren’t already a victim of squatting.
• Secure the Property: Board up windows, keep utilities disconnected, install alarms, and maintain overall good condition to deter squatting.
• Documentation: Meticulous records of ownership, property upkeep, and lack of permission for occupancy strengthen your legal case.
• Time is of the Essence: The moment you suspect a squatter, consult with an attorney specializing in landlord-tenant law. Delays work in the squatter’s favor.

Challenges for Condos & HOAs

In the condominiums and homeowners associations that we represent, squatting happens to owners and because the association doesn’t own the property, it is difficult to address the squatting. Coops are a different form of ownership where the coop owns the building, so it can take action as the owner against squatters. There are tactics that experienced counsel can take for the boards.

What Condo & HOA Management and Owners Can Do:

1. Check Governing Documents:

• Bylaws/Rules: Look for provisions on unit owner responsibilities for vacant units, security measures, or authority granted to the board in exceptional circumstances.
• Lien Authority: Investigate if the association has a lien for unpaid assessments that could form the basis for a foreclosure action, which might indirectly resolve a squatting issue.
• Consider amending the governing documents to give the association more rights in these squatting situations.

2. Support the Owner:

• Notify & Advise: Alert the unit owner immediately and advise them to seek urgent legal counsel specializing in eviction proceedings.
• Enforce HOA Rules: If the squatter is causing disturbances violating HOA rules, fines or other sanctions against the unit owner may add pressure to act.
• Security: Consider enhancing association-wide security to deter squatting.
• Bring a Nuisance Injunction Action: The association usually has authority to bring lawsuits to abate nuisance conditions or rule violations. If so, the association may be able to commence suit to stop nuisances or violations by the squatters which may pressure them to leave.

A brand new Appellate Court decision underscores condo boards’ duty to act in good faith when residents report violations of building rules and regulations. In the case of Bacharach v. Board of Managers of the Brooks-Van Horn Condominium, the board faced legal action after years of alleged inaction regarding excessive noise complaints. The New York Court which oversees the trial courts in Manhattan and the Bronx, refused to dismiss the case against the board and clarified that property managers and condo boards cannot merely leave it to owners to address their own owner-to-owner complaints and the board has to act in good faith when receiving a complaint that an owner if violating the rules.

Case Summary

• Residents complained about unreasonable noise from a neighboring unit due to unapproved flooring installation.
• Despite repeated requests over several years, the board didn’t adequately investigate or enforce the Condo’s noise rules.
• Frustrated residents sued the board for breach of duty and sought an injunction to address the noise issue.

Court Ruling

• The court denied the board’s motion to dismiss, determining:
  • The Condo’s bylaws are ambiguous as to whether the board has discretion to refrain from acting upon complaints of rule violations.
  • The board’s inaction may not be covered by the well-established business judgment rule, which requires actions in good faith for the benefit of the community.
  • “The alleged multiyear gap between plaintiffs’ first complaint and the board’s first action in response to the complaints suggests that the board may not have acted in good faith.”

Takeaways for Condo Boards & Property Managers

1. “Discretion” Doesn’t Mean Inaction: While boards have flexibility in enforcement, ignoring legitimate complaints can be seen as a breach of duty.
2. Document Clarity Matters: Review your bylaws and rules to ensure they clearly define the board’s authority and enforcement responsibilities.
3. Good Faith Response Is KEY: Taking complaints seriously, even if your ultimate ruling favors the accused party, shows you’re fulfilling your role.
4. Timely Action Builds Trust: Promptly addressing potential violations can prevent issues from escalating and damaging resident relations.

Proactive Steps

• Establish and Follow Complaint Procedures: Have a clear process for documenting, investigating, and responding to complaints.
• Regular Bylaw Review: Ensure your rules remain enforceable and fair.
• Seek Legal Guidance Early: Advice from an attorney specializing in condo law can help you navigate complex disputes.

Here is the decision.