Board Hires Now, You Pay Later

Q

I am hoping you can help me clarify a point in my proprietary lease. If the lessor wants to fix something in your apartment (and it is a repair that is not in the co-op’s purview, the shareholder’s responsibility), they have to give you 30 days to fix it – i.e., 30 days’ notice – before they can hire their own contractor and bill you later? But they must give you notice unless it is an emergency like a burst pipe, right? What constitutes “prompt” action?

A

The questioner appended to his question the text of his co-op’s proprietary lease, Paragraph 19, captioned “Lessor’s Right to Remedy Lessee’s Defaults,” which has language that is standard for most New York co-ops. He correctly points out that there are three degrees of notice after which a co-op (the lessor) can undertake repairs to “any part of the apartment, its fixtures, or equipment as herein required” and charge back the apartment owner (the lessee) for the cost of repairs.

30-Day Rule

In normal circumstances, the co-op can do so only if the apartment owner fails to make the repairs during the 30 days after the notice. While seemingly straightforward, that is not the most common situation in which a co-op would invoke Paragraph 19. Many co-ops consider it acceptable to wait for at least 30 days to pass – and sometimes they are willing to wait even longer. The reason? Simply to avoid all the complications – over access, reimbursement, and the rest – that frequently arise if the co-op attempts to make the repair itself.

In such cases, the co-op is more likely to threaten to terminate the shareholder’s proprietary lease if the shareholder does not make the repair, and thus remains in default of the obligation to keep the apartment in a state of “good repair.” The shareholder/unit-owner has 30 days to cure the default.

On the other hand, if a co-op decides that it needs to undertake a repair in an apartment quicker than that, it usually is doing so because there is some risk or disturbance to the person or property of the co-op, its residents, or others that necessitates the repair.

Two Exceptions

As the questioner indicated, Proprietary Lease Paragraph 19 provides for this by creating two exceptions to the 30-day notice requirement: “If the condition requires prompt action, notice of less than 30 days may be given or, in case of emergency, no notice need be given.”

While true emergencies are relatively easy to identify, this provision seems to instruct that before acting with no notice, the co-op should consider whether “prompt” rather than immediate action, and some substantial notice rather than little or no notice, are more appropriate.

In many cases, this will be a debatable determination, which means that a reviewing court would be required to grant substantial deference to the “business judgment” of the co-op’s board of directors, particularly if the board consults with experts in making the determination.

Paragraph 19 also allows the co-op to act if the apartment owner “fails to remedy a condition which has become objectionable to the Lessor for reasons above set forth” (i.e., the failure to make repairs); and, in the standard language, the 30-day notice requirement does not strictly qualify that.

So, arguably, the co-op can act without notice if the failure of the shareholder or unit-owner to make a repair is objectionable, even if not mandating “prompt” action or causing an “emergency” situation, although, in such cases, a co-op might want to err on the side of caution and provide at least some notice, and to be safe, the full 30 days of notice, for unmade repairs that become “objectionable.”

Objectionable Situation vs. Objectionable Behavior

I note that this right of the co-op to remedy an objectionable situation under Paragraph 19 is different than the co-op’s right, under what is typically Proprietary Lease Paragraph 31(f), to terminate an apartment owner’s proprietary lease because the tenancy is deemed “undesirable” by reason of the owner’s repeatedly engaging in objectionable conduct. In the latter situation, the co-op is attempting to pressure the shareholder/owner with the threat of lease termination, to eliminate the objectionable conduct (Paragraph 19). But the co-op also might employ Paragraph 31(f), as well as 31(e), to complement its attempt to remedy an objectionable condition under Paragraph 19, particularly if the resident is resisting the co-op’s attempts to gain access.

All of this discussion must be viewed in light of the broader issues of the co-op’s practical ability to gain access for inspections and repair and to secure reimbursement, which are where these situations frequently blossom into controversies and lawsuits that can subsume the initial debates.

If an apartment owner does not want to make a repair, then there is a good chance that the owner also does not want to grant access for the co-op to do so, particularly because the co-op will soon be charging the owner for the repair.

So for true emergencies, to gain entry to an apartment to inspect and make the necessary repairs, the co-op first might want to try to enlist the services of a locksmith, and the police or other public authorities to supervise.

Non-Emergency Entries

In situations falling short of true emergencies (in the eyes of the public authorities, at least), the co-op will probably need to turn to the courts, typically in the context of an application for access and inspection in a holdover or housing preservation proceeding in housing court, or for a preliminary injunction in an ejectment action in Supreme Court (which in New York is the trial-level court of general jurisdiction).

These procedures are expensive and time-consuming. They also make it more likely that the co-op will be deemed subject to the standards of the New York City Housing Maintenance Code (NYC Admin. Code Section 27-2008), which provides for a landlord’s right of entry to inspect and make repairs “if the right of entry is exercised at a reasonable time and in a reasonable manner.” That has great potential to override the proprietary lease Paragraph 19 standards and expose a co-op to a subjective court determination of what was and is “reasonable” in the circumstances, which could lead the court to find that the co-op was entitled to access to inspect and repair but overreached regarding the timing and other aspects.

That in turn could lead to a determination denying to the co-op the right to receive reimbursement for its legal expenses or, worse yet, denying any relief to the co-op and directing it to reimburse the apartment owner’s legal expenses.

In the end, that should be all the motivation a co-op needs to do its best to confront apartment repair situations with an abundance of care, in spite of the seemingly generous language of Paragraph 19, and to get them resolved, if at all possible, without the need for court intervention.