Business

In a recent legal battle, LiNQ1, LLC found itself at odds with 170 East End Condominium and its Board of Managers over allegations of negligence, breach of contract, and more. This case, indexed as No. 154594/16 Appeal No. 953 Case No. 2022-04598, serves as a cautionary tale for New York condominium boards, emphasizing the importance of addressing problems with common elements promptly. The Supreme Court, New York County, entered an order on October 4, 2022, denying LiNQ1, LLC’s motion for summary judgment on various claims. This article delves into the key aspects of the case and the implications for condo boards facing similar challenges.

The Allegations

LiNQ1, LLC accused the Board of Managers of 170 East End Condominium of breaching its obligations under the condo’s bylaws and governing documents. The plaintiff argued that the board failed to maintain and repair certain common elements, leading to issues such as moisture accumulation and recurring mold infestations within the plaintiff’s unit.

The specific elements highlighted included a 90-degree chiller pipe above the kitchen ceiling, the ventilation system, and the building’s façade. These alleged deficiencies were identified by plaintiff experts as sources of the persistent problems.

Breach of Contract and Negligence Claims

LiNQ1, LLC sought summary judgment on claims of breach of contract and negligence. The court, however, affirmed the denial, citing triable issues of fact raised by the defendant. Disputes centered on whether problems with the plaintiff’s HVAC unit, ventilation rebalancing, or the lack of proper flashing were contributing factors to the alleged issues.

Additionally, the court considered whether the defendant could be held liable in negligence for breaching its nondelegable duty to maintain common elements in good repair, citing relevant legal precedent (Onetti v Gatsby Condominium, Multiple Dwelling Law § 78[1]).

Tortious Interference with Contract and Breach of Fiduciary Duty

LiNQ1, LLC’s claims of tortious interference with contract and breach of fiduciary duty faced scrutiny. The court found that the plaintiff failed to demonstrate, as a matter of law, that the board deliberately failed to make repairs to render the unit inhabitable, leading to tenant lease terminations.

Issues of fact concerning the defendant’s alleged bad faith in performing repairs also thwarted the plaintiff’s bid for summary judgment on the breach of fiduciary duty claim.

Private Nuisance and Business Judgment Rule

The court further addressed the private nuisance claim, emphasizing that issues of fact needed resolution at trial. Whether the ongoing mold condition resulted from negligence or intentional wrongdoing remained a question to be determined.

The defendant invoked the business judgment rule, arguing that its decisions regarding maintenance and repairs were shielded from judicial review. However, the court rejected this argument, emphasizing that the rule does not protect actions lacking a legitimate relationship to the condo’s welfare or taken in bad faith.

Declaratory Relief and Future Implications

The court concluded that any declaration of the parties’ rights and obligations must await trial to determine the existence of a justiciable controversy.

Lessons for Condo Boards

This case underscores the vital importance of condo boards proactively addressing issues with common elements. Condominiums are governed by bylaws and regulations, and failure to adhere to these obligations may lead to legal repercussions.

Condo boards should consider regular maintenance, timely repairs, and transparent communication with unit owners. The business judgment rule, while providing a degree of protection, does not shield actions taken in bad faith or unrelated to the condominium’s welfare.

As this case proceeds, it serves as a reminder to all New York condo boards to approach their responsibilities with diligence, recognizing the potential legal risks associated with neglecting common element maintenance and repair duties. The outcome of this case will likely set a precedent for similar disputes in at least the First Department (covering Manhattan and the Bronx), emphasizing the need for boards to act in the best interests of the condominium and its residents.

The Supreme Court in Richmond County through out a condo unit owner’s defenses to a nonpayment case seeking a money judgment for common charge arrears. The Court found that the affirmative defenses by the investor condo owner were boilerplate and couldn’t withstand summary judgment.

The owner stopped paying common charges because of a water leak within his units. The Court held that under the condo’s governing documents, there is no right of set off and the unit owner couldn’t withhold paying his common charges because of a water leak.

The Court distinguished another case called Granda v. Condominium I v. Morris (222 A.D.2d 520 (2nd Dep’t 1996) where the parties agreed to a withholding of common charges and placement in an escrow. in that condo, there was an enforceable agreement to withhold common charges, in this case, there was none.

As typical for condos, the governing documents provided for an award of legal fees and costs for collection of common charges. The Court granted the condo summary judgment and set an award of attorneys’ fees and costs for an inquest where the Court would decide how much to award the condo.

Read the decision here.

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:

1. The name of a natural person making the application;
2. A working phone number for the applicant;
3. An email address for the applicant;
4. The address of the building the applicant seeks to add to the list;
5. An explanation of the relationship between the owner and the applicant;
6. Any proof or documentation requested by the administering agency to substantiate the request where the administering agency has cause to require further verification; and
7. 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.