Co-op and Condo Boards Need to Prepare for a Possible Second Wave

With COVID-19 cases continuing to decline, New York City entered Phase 1 of reopening on June 8. Phase 2, which will affect real estate, is expected to arrive late this month. If the rest of the nation’s experience is any barometer, New York City co-op and condo boards need to start getting ready for a possible second wave of the deadly virus. 

More than a dozen states are showing new highs in the number of COVID-19 cases or hospitalizations a few weeks after lifting restrictions on most businesses and large gatherings, according to new Washington Post data. More than 2 million cases of COVID-19 have been reported nationwide, and on Thursday Oregon Gov. Kate Brown announced a one-week “pause” of reopening plans, calling for “a statewide yellow light” after the state reported a spike of new COVID-19 cases. Meanwhile, the New York Stock Exchange plunged nearly 1,900 points on fears of a coming resurgence.

Now is the time for co-op and condo boards to reevaluate their governing documents and adopt amendments and rules that will prepare them for a possible second wave of coronavirus as well as future pandemics, Leni Morrison Cummins, a member at the law firm Cozen O’Connor, tells GlobeSt.com.

“Most standard forms of proprietary leases and bylaws do not adequately address the novel issues and situations presented by the governor’s shelter-in-place orders and other governmental agency and administrative quarantine protocols,” Cummins says. “Further, many board forms and agreements, such as alteration agreements and construction contracts, should be updated before work proceeds.” Here are some issues she advises boards to consider:

Virtual Meetings. To comply with social distancing orders, co-ops and condos should consider amending their bylaws to permit for virtual board and shareholder/unit-owner meetings through the use of videoconference, teleconference or other similar electronic means. Many boards are holding virtual meetings – without specific legal authorization to do so.

Electronic Notices and Registration of Email Addresses. Many shareholders and unit-owners have relocated indefinitely outside the city. Amending the bylaws to permit notices to be sent through electronic mail would ensure that such individuals are able to receive notices in a timely manner and that boards are in compliance with their governing documents’ notice provisions. Bylaws should explicitly require that all shareholders and unit-owners register an email address with the managing agent to ensure that such notices are received.

Electronic Voting. To avoid challenges and unnecessary litigation, bylaws should be amended to explicitly permit voting via email or other digital voting platforms.

Power to Fine. Bylaws can be amended to grant the board authority to fine shareholders and unit-owners who violate house rules and regulations. With the authority to fine, boards are able to enforce the governing documents without going to court.

Authority to Restrict Guests and Non-Essential Workers. Many boards have temporarily banned housekeepers, guests, food deliverers, movers and other non-essential workers from entering the building. Many boards have stopped all alterations. Such bans are ripe for litigation because most proprietary leases and bylaws do not explicitly grant boards the authority to implement them. Proprietary leases and bylaws can be amended to explicitly grant boards this authority during a state of emergency.

Alteration Agreements and Construction Contracts. Boards should also take a fresh look at their current form of alteration agreement and consider updating it to require all workmen to comply with the New York State published construction guidelines, to wear personal protective equipment, and to be trained in COVID-19 protocols. Further, the indemnification provisions of alteration agreements and construction contracts should require the contractor and the shareholder or unit-owner to take responsibility for any fines incurred for failing to follow governmental orders, regulations and protocols. Boards should consider riders (incorporating the foregoing provisions) to previously executed alteration agreements and construction contracts as a prerequisite to resuming alteration or construction work.