Category Archives: Condominiums

The Gray Area of Liability When Building Systems Fail

Posted on March 15, 2018 | Comments Off on The Gray Area of Liability When Building Systems Fail

Copyright by, and republished with permission of, Habitat Magazine.

A pipe bursts. An apartment floods. The resident files a damage claim against the co-op or condo board, contending that the flood was caused by the board’s failure to provide necessary maintenance of building systems.

The board should not simply write a check for the damages. Instead, it should check the declaration, offering plan or other governing documents to determine if the pipe is located in the so-called “common area,” for which the board is responsible. If it is not, the shareholder or unit-owner must deal with the problem on her own. Continue reading →

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Posted in Condominiums, New York Law, Real Estate

The Dangerous Side of Security Cameras

Posted on February 16, 2018 | Comments Off on The Dangerous Side of Security Cameras

Copyright by, and republished with permission of, Habitat Magazine.

Surveillance cameras are a valued tool for keeping co-op and condo residents safe. They also have a dangerous side – when their footage is needed as evidence following a crime or accident on the property. Boards need to understand that they have legal obligations – and that they’re open to liability – in such situations.

When a board learns that someone has slipped on ice and fallen on the property, sustaining personal injury, it should immediately do three things. First, notify the managing agent; second, have the agent put the building’s liability insurance carrier on notice; and third, implement a so-called “litigation hold” with respect to all surveillance videos in, on, or around the premises.

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Posted in Condominiums, New York Law, Real Estate

Using Personal Email Accounts for Co-op Business Is a Very Bad Idea

Posted on February 8, 2018 | Comments Off on Using Personal Email Accounts for Co-op Business Is a Very Bad Idea

Copyright by, and republished with permission of, Habitat Magazine.

For many co-op and condo board members, email is the default means of communication. Most people have two accounts: a personal one that may also contain family, medical and financial information; and a business account that might contain confidential, proprietary or insider information. Both accounts may contain information that is protected by the attorney-client, marital, or another privilege.

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Posted in Condominiums, New York Law, Real Estate

The Right of First Refusal: A Condominium Minefield

Posted on November 1, 2015 | Comments Off on The Right of First Refusal: A Condominium Minefield

Real Property Law Section 339-v(2)(a) permits condominiums, in their by-laws, to include “provisions governing the alienation, conveyance, sale, leasing, purchase, ownership and occupancy of units[.]”.

Based thereon, most residential and commercial condominiums include, in their by-laws, a so-called “right of first refusal” – pursuant to which an owner, before selling a unit, must offer the apartment to the condominium or to a contiguous owner on the same terms and conditions as the contemplated third party transaction.

It is quite rare and unusual for a condominium to, in fact, exercise the right.  However, two recent decisions by the Appellate Division, First Department, are instructive as to the issues that may arise when a condominium elects to do so.

Bittens v. Board of Mgrs. of the Octavia Condominium, 2013 NY Slip Op 33218(U) (December 17, 2013) and 2015 NY Slip Op 07540 (October 15, 2015) Continue reading →

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Posted in Condominiums, New York Law, Real Estate

Marbury Corners: A Legal “Cond-Opera” in Three Acts

Posted on September 1, 2015 | Comments Off on Marbury Corners: A Legal “Cond-Opera” in Three Acts

Prologue
The Board of Managers of the Marbury Club Condominium (the “Board of Managers” or the “Board”) [the “Condominium”], filed suit against Marbury Corners LLC (the “Sponsor” or “MC LLC”), Ginsberg Holdings LLC, Martin Ginsburg (“Ginsburg”), William Riehl, Susan Newman, Dan Mulvey and Rob Lodes (collectively, “Defendants”).

The action arose out of the conduct of Sponsor (the developer under a residential condominium conversion plan, its manager and principal), together with the sponsor-appointed and controlled initial board of managers of the Condominium, in signing a $2.2 million note to Sponsor (the “Promissory Note” or the “Note”)  secured by an assignment of, and a security interest in, common charges collected by the Board from unit owners.

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Posted in Condominiums, Litigation, New York Law, Real Estate

Second Department Affirms Invalidation of Promissory Note From Sponsor-Controlled Board of Managers to the Sponsor of a Residential Condominium Conversion Plan

Posted on September 19, 2012 | Comments Off on Second Department Affirms Invalidation of Promissory Note From Sponsor-Controlled Board of Managers to the Sponsor of a Residential Condominium Conversion Plan

(Victor M. Metsch is a Senior Litigation/ADR partner at Hartman & Craven LLP.  He can be reached at vmetsch@hartmancraven.com.  He maintains a website at www.LegalVictor.net and can be found on Twitter at @LegalVictor1).

This article was originally published on Law.com

On August 22, 2012, the Second Department issued a clear and concise Decision and Order in Board of Managers of Marbury Club Condominium v. Marbury Corners, LLC, 2012 NY Slip Op. 06008.

The first paragraph described the appeal:

In an action, inter alia, for a judgment declaring that a certain promissory note and related documents are illegal, invalid, and/or otherwise unenforceable, the defendants appeal, as limited by their brief, from so much of an order and judgment (one paper) of the Supreme Court, Westchester County (Scheinkman, J.), dated September 22, 2010, as granted those branches of the plaintiff’s motion which were for summary judgment declaring that the subject promissory note and related documents are illegal, invalid, and/or otherwise unenforceable and on the cause of action for injunctive relief, declared that the subject promissory note and related documents are illegal, invalid, and/or otherwise unenforceable, and awarded the plaintiff certain injunctive relief.

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Posted in Condominiums, New York Law, Real Estate

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The ‘business judgment rule’ conundrum: Legality vs. reality

Posted on April 17, 2012 | Comments Off on The ‘business judgment rule’ conundrum: Legality vs. reality

Victor M. Metsch is a Senior Litigation/ADR partner at Hartman & Craven LLP.

This article was originally published by Thomson Reuters.

Almost every legal dispute arising from decisions by the boards of directors of cooperatives or the boards of managers of condominiums centers around ritualistic and talismanic references by both sides of the issue to their conflicting reliance on the “business judgment rule.”  The governing bodies and their members claim they acted in good faith, to address a matter of corporate concern, within the scope of their authority. In marked contrast, the unit owners claim that the board acted in bad faith, on a matter outside their realm, for a collateral purpose.  The disputes are often extreme and vitriolic because, for the most part, the issues pit neighbor against neighbor or one board faction against another.

It appears that the rule, as initially fashioned by the Court of Appeals in 1993, and explicated in 2003, was designed to limit the amount of litigation arising out of decisions by the governing boards. To the contrary, however, the subsequently developed caveats and exceptions to the “business judgment rule” have resulted in an explosion in litigation challenging and defending decisions by residential building governing boards. Continue reading →

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Posted in Condominiums