Ask the Attorney

We are on the board of a 525-unit Brooklyn cooperative. Seldom does a month pass when our on-site property manager does not receive a shareholder complaint about leaks or noise from an adjacent apartment. Usually the leaks occur when there is a toilet or bathtub overflowing or a leaky pipe. The noise complaints include walking or running or loud playing of the radio or television in the apartment above. Our board has to deal with many building-wide problems. Do we really have to get involved in this situation? And, if so, how can we limit our responsibility and potential liability?

Co-ops are deemed landlords (or, maybe, “doomed” as landlords). That means they are expected to provide “habitable premises” and “quiet enjoyment,” and to protect the health, welfare, and safety of all of their tenants (even the owners of multi-million-dollar apartments who can well afford to enforce their rights against transgressing neighbors).

Noise complaints sometimes have straightforward solutions. The source, cause, and extent of the noise may be readily apparent and indisputably objectionable. Sometimes, the noise complaint may simply require enforcement of the co-op’s house rules, such as those requiring a designated percentage of floor covering (usually 80 percent), or banning music after certain hours. Other times, the noise may constitute construction activities conducted without proper board approval, or in violation of the co-op’s alteration agreement or rules. In extreme cases, usually involving commercial activities, decibel levels can be measured and governmental limits invoked. In these and similar situations, the co-op can (and should) promptly enforce the rules for the benefit of the aggrieved residents.

Co-ops may flounder regarding noise if there are no clear transgressions. Then they may find themselves cast adrift in a subjective sea of accusations and denials that not infrequently leads to confrontations of the legal and extralegal kind. In such situations, co-ops are often tempted to stay on the sidelines or to delay or protract their responses, so long as the residents are not withholding maintenance in protest. After all, the co-ops rationalize, the aggrieved are entitled to sue the transgressors for nuisance. Who are board members to judge who is right or wrong when no specific co-op rules, or applicable laws, have been violated?

But the better policy is for the co-op to at least attempt to take charge. That means interviewing the aggrieved and the transgressors, investigating their claims, informally mediating the dispute, and, if the proof is clear that the grievance is sound, using the power of the co-op to truly deliver the quiet enjoyment to which all residents are entitled. The entire co-op benefits when the board stands up for the peace and tranquility of its residents.

Leaks can be messy and disgusting, legally as well as physically. They migrate from their sources through common areas, as well as into various apartments. In the process, the issue can suck in multiple owners, other residents, insurance representatives, architects, appraisers, and many others, including, of course, lawyers.

All sides and their insurance carriers will attempt to involve and implicate the co-op as the deep pocket with building-wide responsibilities. The co-op will be left to ponder some obtuse standard proprietary lease language, which is subject to various interpretations, and to negotiate with its own and others’ insurance carriers and adjusters.

The co-op generally is responsible for damage or other loss to an apartment only if the leak was caused by the co-op or emanated from a common area. And, even then, the co-op usually is bound to provide repairs and replacements of a kind and quality matching what was there previously. It is not required to replace equipment, fixtures, furnishings, or decorations installed by the resident or any predecessor, or to repair or replace wallpaper or other decorations in the apartment or to refinish floors.

If the co-op assumes responsibility (intentionally or not) for some or all of the damage or other loss, then a co-op’s insurance carrier will not pay, or reimburse the co-op, unless the co-op was required to assume responsibility. And even then a high deductible may require a significant co-op contribution for each incident, and each claim may increase the next year’s premium (although that is an intangible that is hard to monitor).

So the co-op should not reflexively assume responsibility for damage and other loss if the source, cause, or responsibility for the leak is at all in question. The aggrieved resident should be instructed to notify the resident’s own insurance carrier, the co-op should notify its carrier, and the co-op should see where that leads.

But the variations are many and, in the end, the parties can get entangled in protracted, expensive and heated controversies over the allocation of responsibility, as well as the evaluation of the damage or other loss. So, once again, the well-managed co-op should be prepared to become actively engaged in working toward a practical solution, offering to contribute with work or funds to get matters resolved.

The co-op also should be regularly developing, implementing, and updating a building-wide program to avoid recurring leaks and related problems.

In the end, with leaks and noise problems, the co-op that smartly leads even when not strictly required to do so paves the way for just, quick, and practical solutions to the problems that inevitably occur and to the avoidance of similar problems in the future.

We have had the same management company for as long as I can remember, and we are fairly content. But the property manager assigned to our building changes every year or two. The firm lets us meet the new managers before they are assigned to us, but we really are not given a choice. Once or twice, I am told that we have requested changes and the company acquiesced after some time. Some of the agents are really good but others seem inexperienced or uninterested. Should we be concerned about delegating a lot of responsibility to these ever-changing property managers or can we trust that a good management company is overseeing their work?

To board “doers,” board delegators are lazy, irresponsible, or, worse yet, corrupt. They are content to tolerate, or too stubborn to admit, or too dense to recogize the inevitable, regular, and largely avoidable screw-ups that occasionally lead to substantial losses. “Big picture” people, on the other hand, think “doers” are really closet control freaks, screwed-up from childhood and unnecessarily intruding on what the property manager and staff are paid and better suited to handle. Ideally, a board has both delegators and doers and they find a way to work together. But co-op boards, in my opinion, simply should not entirely delegate any significant decision-making, or even certain implementation, to property managers.

Most property managers try their hardest in very difficult circumstances and many even regularly deliver amazing results. But they are frequently under-experienced, overextended, and underpaid. So it is not always easy for boards to accurately determine how much reliance the boards can safely place on their property managers in any given circumstance unless there is substantial prior experience with the property manager in similar circumstances.

And even with this prior experience, for many reasons, the board cannot simply assume that the property manager will fully perform in the case at hand. Even good, reliable lawyers sometimes make mistakes.

The solution is not to fire your management company or (unless there are conflicts or serious malfeasance) to regularly demand that the management company provide new and better property managers. There are more practical and less disruptive alternatives.

First, boards must be certain that they have an ample supply of board doers doing what they do best. This is not always easy to accomplish. Delegators arguably are more likely to run for the board and to be elected. They are natural leaders who enjoy the perks (few though they may be) of winning and serving. And anyway, they don’t deem it a hard job.

Doers sometimes have to be prodded to run for the board because they know that their board work will consume their time given their doer natures. And shareholders may conclude that, in casting their votes, they can safely rely on delegators, because, after all, the co-op has professional property managers. But that is not always the reality, and in my experience, the gap must be filled with doer board members.

Second, if doer members are currently unavailable, then the delegators must make a special effort to insure that senior personnel of the management company is available and engaged for oversight of important issues or projects. (In some circumstances, the co-op’s attorneys can provide some of this oversight, but that can get expensive and should be unnecessary for strictly non-legal matters.)

It should be no secret that property management companies will put forth this extra effort if asked, especially if the delegator board does not abuse the privilege and recognizes that the long-term solution is to have a sufficient number of doer board members. If the management company refuses, then the co-op board should quickly and resolutely look elsewhere. Because, in the end, many of the issues and projects are simply too complex and important for the board to assume that the property manager can or will handle them without meaningful oversight.