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.
