CO-OP/CONDO BUYERS

We're buying an apartment in a building that allows smoking. Since we smoke, we're worried this could eventually be banned. Thoughts?

When you say the building "allows smoking" I would assume this means it does not have any restrictions regarding smoking in resident apartments or common areas. But there still may be consequences.

Smoking can be a management company nightmare. We get a call from a resident that her child's room smells of smoke. An elderly person complains of being ill from second-hand smoke. A board member wants action. The house rules do not provide a means for the board to act. What can be done? A friendly letter from the management company making the resident aware of the complaints would be a start. Also helpful: a visit from the manager to inspect the premises and determine the legitimacy of the complaints, and perhaps offer suggestions.

These are some of the potential consequences to be expected for a smoker in a building where restrictions on smoking are not imposed. Where restrictions are written the consequences can be even greater. Fines can be imposed, legal notices may follow, and a great deal of management oversight will be needed.

What we would always suggest is that those who choose to smoke get a high-quality smoke purifier or filter system. Perhaps restrict your smoking to the room or rooms where you have such filters. And perhaps simply respect the rights and comfort of your fellow residents by limiting your smoking in your apartment. You do not want to be the catalyst behind a new board resolution restricting smoking or imposing new fines.

Seth Kobay is president of Majestic Property Management. 

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We just learned that the building's proprietary lease expires in three years. Our lawyer says that is a problem. How so?

If the proprietary lease expires in less than 30 years, it should be amended to extend the term so that owners can obtain financing. If a proprietary lease's term is shorter than 30 years, banks may not provide a mortgage because their collateral is not protected. To increase the expiration of the lease, the bylaws require that the proprietary lease be amended. The percentage of shares required to amend a lease can be found in the proprietary lease.

It is imperative that a managing agent and/or the co-op attorney check all lease expirations so that a cooperative meets the bank requirements and apartment sales can go forward. A "Notice of Approval of Lease Amendment" must be sent out to all shareholders to obtain written consent to increase the lease by a minimum of 30 years.

With a co-op's lease expiring in three years, buyers — unless they pay cash — will not be able to finance their purchase. The proposed amendment should be drafted by the co-op attorney setting forth the purpose and importance of voting for the amendment.

Ellen Kornfeld is vice president of The Lovett Company

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In a cooperative, the use of the premises — which includes subletting — is governed by the corporation's proprietary lease; in a condominium such use is governed by the declaration to the bylaws. The general rule is that an apartment can only be occupied by the unit-owner(s)/shareholder(s), or any immediate family member, but in no event may a guest, or in this case a "roommate," occupy the apartment unless one or more of the permitted residents are in occupancy.

That said, the question posed is much more likely to be a potential scenario at a condominium. In a cooperative, where boards have the right to reject prospective purchasers, boards carefully scrutinize the finances of these would-be buyers and if they are not in a position to afford the apartment without the additional revenue from a roommate, it is unlikely a co-op board will approve them.

The situation described is not ideal for a condominium, as transient traffic is usually discouraged. With the advent of Airbnb and similar services, it has become easier for unit-owners to generate income through short-term rentals. The proposed scenario might be difficult to prevent if the unit-owner remains in residence with the "roommate," as New York City housing laws permit.

It should be made clear to all prospective condominium unit purchasers that they may be entitled to have a roommate, but the roommate must observe all building rules and the unit-owner is responsible for any infractions of building rules by the roommate.

Max G. Freedman is vice president of Maxwell-Kates.

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Very often, a board will decide to try to work out a payment plan with a resident who is in arrears. That avoids costly legal action, which will increase the amount that the resident must eventually pay, and maintains an amicable relationship between the board and the resident.

We always try to take this path, unless the circumstances are such that the resident has no plan or options available to pay the amount owed. In those cases, unfortunately, legal action needs to be started to limit the impact on the building. The arrears need to be monitored every month and discussed with the board so that the amount does not get overlooked and become a bigger problem. Most buildings operate on a break-even budget, and that assumes everyone is paying his or her fair share each month. When that doesn’t happen, operating bills cannot get paid in a timely manner.

Donald E. Wilson is president of Blue Woods Management Group.

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Do you think it’s a problem if the same person has been the board president for 20 years?

Some buildings prefer reelecting certain board members year after year to preserve the continuity of a co-op/condo’s history and style of oversight.

Shareholders elect a board but the board members then elect their officers. If a board president and treasurer have been in their respective roles for many years, it is often because those people may have the most time and/or experience to handle those roles.

For new shareholders who may find this scenario strange, we recommend they nominate themselves as candidates on the annual meeting proxy/ballot form and/or get involved on subcommittees. Many buildings welcome new shareholders to participate on special projects, provided the involvement is genuine, consistent, and beneficial to the building.

Georgia Lombardo-Barton is president of Barton Management.

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Life in a co-op is all about community. But sometimes community living can present challenges ranging from personality clashes to more serious matters, such as dealing with a super who's, well, less than super. Take this co-op in the Upper West Side, for example, which is coping with an allegedly belligerent live-in super. "[He] appears to have a drinking problem. He literally passed out, face down on the sidewalk, in front of the building early one morning. He got into a physical altercation with a vagrant in front of the building and had to be hospitalized. He verbally abuses building staff," one of its shareholders writes to Ronda Kaysen in this week's Ask Real Estate column in The New York Times. According to the shareholder, the super doesn't seem to be drinking during business hours. "But shouldn't he be coherent and alert at all times, ready to make an important decision at any time, if needed?" The co-op board doesn't want to make a move "because they think that what he does on his own time is his own business." That's quite a pickle. "A live-in super has a right to a private life," answer Kaysen. "But when he behaves in a worrisome manner in or outside the building, his personal choices become his employer's problem, because management sets the standards for workplace behavior." Furthermore, the super needs to be available in emergency situations, even if they occur in the middle of the night or any time before he starts or after he finishes his shift. The board's "cavalier attitude" is especially alarming, Kaysen points out. "[It] puts the safety of residents and other employees at risk." If the board feels firing the super is too drastic a measure, then it should certainly takes steps to improve the situation. That may mean conducting an evaluation and putting the super on probation to give him a chance to rectify his problematic behavior.

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We want to buy an apartment in an HDFC co-op, but there is no financing permitted. Why?

HDFCs are unique and quirky properties, and each can have its own set of rules and restrictions. In years past, banks didn't know what to make of HDFCs; now, unfortunately, most lump them all together.

Why the reluctance? First, many HDFCs (that stands for Housing Development Finance Corporation) are not 100 percent sold. Often, a percentage of rent-stabilized apartments are owned by the corporation. Banks don't like this. Also, many (not all) HDFCs are saddled with arrears issues — financial, tax, etc. Where a regular co-op would be acceptable to a lender, a hybrid like the HDFC is overcomplicated.

The HDFC itself may prohibit financing. Prospective purchasers should carefully read the corporate bylaws. Frequently, HDFC shares are not permitted to be used as collateral. In some HDFC proprietary leases, lines of credit or home equity loans are prohibited unless the funds are for improvement of the unit itself; financing a car, second home, or college education are out.

If no bank is willing to grant a loan, the best bet for home buyers is to purchase an HDFC unit with cash. Some HDFCs may be open to self-financing; buyers, in essence, obtain a mortgage from the co-op. More HDFC corporations may want to explore this; it offers significant advantages to both sides.

Buying in an HDFC can be frustrating, to put it mildly, but with patience and persistence, an HDFC remains a great, affordable real estate option in New York City.

Josh Koppel is president of HSC Management.

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My lawyer is warning me that, because of the building's age, I should look elsewhere. Should I?

Every building has problems, but sometimes older buildings are built better. New construction techniques and methods are proven to be less effective compared with old ones. Inspections and due diligence are very important tools to make proper decisions. Some of the things to look out for are electric wires, plumbing, treatment for termites and other bugs, lead paint, energy-efficient windows, and the heating and air-conditioning systems.

Sami Najjar is a partner at Sandra Greer Real Estate.

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A few months ago we told you about how some prewar buildings in Lower Manhattan, which were originally built as office towers in the early 20th century, are being converted into residences. These buildings include the iconic Woolworth Building. If you're wondering how the transformation of its top floors into high-end condos for the super rich and mega lucky is progressing, then wonder no more. As part of its "Real Estate NYC with Katherine Clarke" series, the New York Daily News got a look. Alchemy Properties CEO Kenneth Horn tells Clarke that it was important to preserve the building's grandeur and the character rather than try to modernize it. Smart move. Check out NYDN's video… and maybe consider playing the lotto. 

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The minutes of the building I'm looking at are incredibly detailed with quoted exchanges from the meetings and a lot of personality. What should I take away from that?

Minutes should record the actions of the board in a very succinct and businesslike manner. They should not go on for pages and they should not get into all of the scuttlebutt of the building. The minutes should be short, to the point, and leave out all the other "colorful" actions that may go on during the decision-making process by the board.

If you are reading minutes where there are quotations and other peripheral items included that says to me that there's a lot going on in that building and the board isn't together on its decision-making processes. Less is more when it comes to taking minutes and the business of the building should be properly recorded in them.

It is important to remember that the minutes become public record when they are read by outside counsel on behalf of prospective buyers. Therefore, it is important for the minutes to reflect business and business decisions only. Boards should also be aware that there is potential liability in "colorful" minutes.

Timothy Grogan is president of Grogan & Associates.

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