Inside, Outside, Whose Side?

A classic conundrum of cooperative governance is assigning responsibility for repairs in apartments. A distinction is often made between those repairs involving an apartment’s interior – items you can see – which are, according to “common wisdom,” a shareholder obligation, and those items inside the wall – items you cannot see – which are, again, according to “common wisdom,” typically deemed the cooperative’s obligation.

Although the inside/outside delineation appears intuitively simple, it is often wrong and in many cases an oversimplification. Moreover, the proprietary lease is not necessarily helpful in reaching the right result. Many of the proprietary leases are “one size fits all” – that is, form leases that were inserted into offering plans without any consideration of the applicability to the building and its particular systems. For example, buildings with central HVAC systems may find the lease nowhere mentions those systems. Buildings with no terraces may have a terrace clause – or vice versa. As a result, most proprietary leases engender more questions than answers.

Here are some of the more common – and troublesome – areas where the difficulties in assigning responsibility can arise:

When a Window Is More Than A Pane. If window replacement/repair is not specifically addressed in the proprietary lease as the responsibility of either the cooperative or the shareholder, are the windows part of the apartment interior and a shareholder responsibility? Or do they constitute a part of the building façade? In many cooperatives, window repair is assumed to be a cooperative responsibility, except where the proprietary lease specifically assigns responsibility to the shareholder. But whether presumed to be a cooperative or a shareholder responsibility, many questions arise.

A window is technically more than just glass, including a frame, a sill, and sash or casement (the part which holds the glass and connects it to the window frame). So, when a shareholder complains of a broken window, a board must ascertain:

• which parts of the window are broken and require replacement or repair

• whether, in under the particular language of the proprietary lease these broken components constitute part of the building exterior or “building standard equipment” or may arguably be part of the shareholder’s apartment interior

• whether shareholder negligence contributed to the damage (in which case, regardless of the lease language, the shareholder may be ultimately responsible for all or a portion of the cost of the repair).

What about replacement? If the windows need to be repaired, but are in such bad shape that repair is out of the question, who is obligated to replace the window? And, if it is the shareholder, can the board compel replacement? These are some of the issues with which a board must grapple in dealing with windows.

The Interior Life of a “Shower Body.” Plumbing problems are often an area of dispute. Where a pipe that services a line of apartments is broken, the resolution is easy – that is a “main” or “principal” pipe and undoubtedly the cooperative’s responsibility. But what about plumbing items that service only one apartment – much as branch pipes do? A good example is a shower body.

A “shower body” is a T-shaped metal casing affixed to the framing behind the finished shower wall and soldered or screwed onto the water supply line for the apartment. The purpose of the “shower body” is to control the mix of hot and cold water to the shower head. Each “shower body” serves the particular shower head to which it is affixed. While all would agree that a “shower body” is neither a main nor principal pipe servicing the entire building, it is, nonetheless, situated behind the apartment wall.

“Shower bodies” are rarely, if ever, specifically mentioned in the proprietary lease; however, most cooperatives (in our experience) treat them as a shareholder obligation, in the nature of a fixture servicing an individual apartment. Recently, however, an appellate court called this assumption into question, resorting to the “inside the wall” dichotomy. Perhaps the decision arose from the specific lease language there, or perhaps this case is an anomaly. The decision, nonetheless, highlights the difficulty of interpolating consistent rules for specific repairs from the broadly worded language of a typical proprietary lease.

Too Hot to Handle. Similar to the shower body issue, are heating systems and partially exposed pipes servicing the radiator. Radiators serve to fulfill the cooperative’s obligation to provide heat. But they, and their exposed pipes, are clearly visible – that is, outside the wall and inside the apartment.

This example points up the problem of the “one size fits all” nature of proprietary leases. On the one hand, consistent with the “if you can see it, it’s the shareholder’s responsibility” thinking, all exposed piping is often explicitly made the responsibility of the shareholder, but then the same lease may exclude from the shareholder’s responsibility piping within the walls. What if the pipe is only partially exposed? Were that not confusing enough, some leases also exclude from a shareholder’s obligation heating equipment that is part of the standard building equipment. Does this mean that the exposed piping leading to the heating unit is the responsibility of the shareholder – and the heating unit itself the responsibility of the cooperative? What if the heating unit is also part of a central air conditioning system? Does the lease language, referring only to heating equipment, make the HVAC equipment, visible in the apartment, solely the shareholder’s responsibility?

Many cooperatives may assume the obligation with respect to the central heating or HVAC equipment, in large measure because if an individual shareholder makes repairs, and the repairs are not done properly, the impact of those faulty repairs may affect not only that shareholder, but the entire building system. Moreover, since the cooperative has a statutory obligation to provide heat (but not air conditioning), the cooperative may be more proactive so that a shareholder’s failure to maintain equipment does not result in a statutory violation. Yet, a strong argument can still be made that at least the financial responsibility for those repairs belong to the shareholder.

The Vanity of Marble Vanities. Where the lease is otherwise silent and the cooperative has a right of access to individual apartments, who is responsible for the cost of removing and replacing shareholder installed improvements when necessary to access and make structural repairs?

Every cooperative eventually must tackle a building repair that requires the temporary removal and reinstallation of purportedly costly shareholder improvements (such as marble vanities, custom cabinetry, and tile floors). In this situation, the first questions that invariably arise are who will pay for the removal and reinstallation and who will cover the cost of any damage to the improvements (or the apartment) that may ensue? In addition, the cooperative must also determine who is responsible for the particular repair at issue and whether shareholder negligence has contributed to all or any part of the problem.

When an existing alteration agreement does not directly address this situation and the lease is otherwise silent, the contractual right of access is typically deemed to include the right to remove shareholder improvements to reach walls, floors, and ceilings to facilitate repairs. Typically, the shareholder will be asked to remove and reinstall his or her own improvements, with the proviso that should the shareholder fail to do so, the cooperative will step into the breach at the shareholder’s expense and peril (although this alternative is not practical where emergency repairs must be completed within a narrow time frame).

In most cases, removal/reinstallation costs are negligible compared to the potential damage to expensive cabinetry, tiling, wallpaper, and countertops. Some leases require the cooperative to replace walls, floors, and ceilings “in as good condition as before removal.” Others require restoration of the apartment to “its proper and usual condition.” Both terms are ambiguous, subjective, and may arguably not cover shareholder improvements. Whatever policy a cooperative ultimately elects to follow with respect to shareholder improvements, it is important to apply the policy consistently and to make sure that a shareholder understands, in advance, the scope of the repairs to be conducted in and/or to his/her apartment, the extent to which shareholder improvements must be removed (and reinstalled) and who will be paying for any damage.

Lex Terrace. In the absence of express language, who is responsible for repairing a terrace? And what is meant by terrace?

Terraces are often a source of leaks. They are also – perhaps because of the frequent leaks– another potential area of confusion and conflict. Some leases have no explicit requirements relating to apartments with adjoining terraces. Others require little more of a shareholder than the removal of leaves, ice, snow, and other debris. Some leases require the cooperative to maintain the roof. Some leases also require a shareholder to maintain the terrace. But what does that mean? The terrace has a walking surface – but an entire roofing system exists underneath that walking surface. Is the terrace a roof and thereby the cooperative’s responsibility? Or, as an amenity for a particular apartment, used exclusively by one shareholder and clearly visible, is it a shareholder obligation? How is responsibility to be delineated?

In our experience, because of the importance of the roofing system to the building, and the nature of the repairs, unless there is shareholder negligence (such as with overweight planters) the cooperative will assume the responsibility to avoid the more profound consequences that a faulty or incomplete repair may engender.

While these examples highlight some potential problems, what is a board to do? First, it should investigate carefully the cause of the problem. This involves working closely with its professionals – the managing agent, architect or engineer, and legal counsel. Next, a board must determine if the problem has been caused by shareholder negligence. In that case, regardless of the lease language, it will be a shareholder responsibility. If no shareholder negligence is involved, then the lease should be examined carefully with counsel. If the specific item needing repair is not addressed in the lease, an analysis, in consultation with the managing agent and/or the architect or engineer of that item, who it serves, and the nature of any building system to which it relates will be helpful in assigning responsibility.

Looking to the future, the board should discuss with its attorney possible amendments to its proprietary lease. Although a “standard” version of proprietary lease can address a number of situations, every building is unique (both in its actual construction and the make-up of its shareholder population). Thus, what is appropriate and/or fair for one building, may not work for another. Lease amendments should consider the legal issues, the nature of the building systems actually existing, practical concerns, and shareholder expectations. Most importantly, boards should be aware of the types of controversies that arise and seek to clarify the responsibilities of the cooperative and its shareholders to minimize disputes and their potentially costly consequences.