Keep Everyone Honest

The Low-Down

At an initial meeting and interview of prospective purchasers of a unit, the co-op board asked whether they intended to make any alterations. The response was, “Only some simple decorating, painting, and maybe changing some fixtures.” The purchasers were told that the building had two different types of alteration agreements – one for the simple projects, and one for more detailed projects. They were approved. They signed. They indicated that the nature of the work would be of the simple-project nature.

A week or two into the project, one of the neighbors complained about excessive noise. The managing agent was called. He inspected the premises and found that instead of just painting and changing fixtures, workers had entirely gutted the bathroom and the kitchen.

The Weigh-In

The board contacted my office to see what it should do. I said to immediately contact the shareholders and tell them that they could not perform any further work until the building had either brought in an engineer, or the managing agent had inspected the project to see what was going on. They inspected and found out that the scope required the more detailed alteration agreement. Then the board negotiated with the shareholders with the caveat that if an agreement couldn’t be reached, the work would not be continued.

The Outcome

The new purchasers agreed to all the terms under the enlarged alteration agreement, which included a larger deposit. The board arranged to have its independent engineer – who was paid for by the purchasers – come in and do periodic inspections, to make sure that the revised scope, which also required an amended application with the Department of Buildings, was being adhered to.

At the end of the day, there were no negative effects on the building. But if one of the neighbors hadn’t complained about noise, this project could have gone through and there could have been serious consequences. There could have been code violations; the bathroom may not have been handicapped-accessible, and branch plumbing lines and wiring would not have been replaced as required under a major alteration.

The Take-Away

Alterations in any unit affect the entire building. If they are not properly monitored, the work can have a significant negative impact on the building, on the shareholders, and on conditions in the building.

The lesson, unfortunately, is that the board can’t believe what it’s told in an interview when someone is seeking to buy an apartment. To determine the condition of the apartment before an alteration begins, you must have an initial inspection by a knowledgeable property manager or an engineer, which is paid for by the purchaser. Then you periodically monitor the work to make sure it’s in line with the alteration agreement and as specified in the plans.

Additionally, if there are problems that come along that were unknown because there had been prior modifications or they were behind walls, it can be determined whether it’s the building’s responsibility or the shareholder’s responsibility to address them.