How to Prevent Shareholder Safety Issues

Two recent tragedies — the deadly Bronx fire and the Florida condominium collapse — should be a wake-up call to all community association boards. Boards that are concerned about the costs of making repairs should factor in what will happen if there is a tragedy. While repairs may seem expensive, they will pale in comparison if boards face liability that exceeds their insurance policies; if their insurance policies get canceled or the premiums rise astronomically after a tragedy; or if board members face individual liability because they knew of major life-threatening conditions but failed to act. More important, inaction can cause the loss of human life.
While there appear to have been routine fire-safety measures the owners of the Bronx building should have taken, there is something else that can be done: Stop the use of hazardous items in the first place.
Our firm recently encountered a community association where fire pits and space heaters were a concern, heightened by a recent fire that burned multiple units. Instead of addressing how to put out a fire after it starts, this board approached us and asked how it could stop dangerous uses that could cause a fire in the first place. We recommended that the board propose an amendment to its governing documents, specifically banning space heaters and similar hazardous items. A special meeting of unit-owners was held.
The board had to educate unit-owners about the hazards of fire pits and space heaters, and it even had to combat a social media campaign urging unit-owners not to pass the amendment for what appeared to be their personal motivation to continue to be able to use these items. Ultimately, smarter minds prevailed. Almost 90% of the unit-owners voted at the special meeting in favor of the amendment — well above the required two-thirds majority.
While we understand that sometimes banning the use of certain items is not popular, board service is not an easy job and decisions have to be made in the best interests of residents and the association. I’m sure most board members can recall times when they needed to raise maintenance, common charges or impose assessments due to rising costs during times of economic uncertainties. They do it not because it’s popular but because that is what’s needed to pay the association’s bills. The same is true here.
You may be thinking: “That’s great. You created a provision that makes it a violation of the governing documents to use these items. But what are you going to do to stop people from using them?” We empowered the board with an additional amendment that makes unit-owners responsible for the legal fees when the board needs to enforce its governing documents. This way, when the board asks the owner to comply and the owner refuses, the board can commence a lawsuit knowing that any legal fees they incur will ultimately be the responsibility of the unit-owner.
Bottom line: The best way to deal with tragedies is to prevent them.
Marc Schneider is the managing partner at the law firm Schneider Buchel.