Clarifying Renovation Rules to Keep the Peace in Your Co-op or Condo
Oct. 15, 2015 — Imagine a three-bedroom apartment that's been newly renovated from two-bedrooms, taking up the same space but with gleaming new floors, a state-of-the-art kitchen, improved lighting, and enough new electrical outlets to satisfy the most high-tech home. Yet the apartment-owner pays lower maintenance or common charges than the owner of an older, non-renovated three-bedroom in the same building.
Can that possibly be right or fair? And what if a disgruntled neighbor claims those renovations happened without board approval, either because the board didn't know or turned the other way? What happens then?
First things first: It is illegal to convert a two-bedroom apartment into a three-bedroom without modifying the building's Certificate of Occupancy and filing the work with the Department of Buildings.
But say that's been done. Does that change the common charges? According to veteran manager Steven W. Birbach, president and CEO of Vanderbilt Property Management, there's nothing untoward about owners of renovated apartments paying lower common charges if those charges are based on "percentage of common elements" — essentially, a unit's square footage.
Of course, there are light and fresh air considerations that are code-mandated for habitable rooms — for example, lot line windows cannot be used for light and air calculations — so this is not something that anyone should take on lightly or without professional advice. But if, once getting the all-clear, a two-bedroom was made into a three-bedroom by walling in a windowed area, with no change to the square footage, "the monthly charges will never change," Birbach says. "They have the same space. It's not a rental apartment where if you fix it up you get more rent. The applicable amount of common interest does not change whether you renovate or not." A same-sized co-op or condo apartment "may be worth more, but that doesn't change the amount of maintenance or common charges."
If someone who renovated increased their apartment's size or bought common elements — such as rooftop space or basement space to create a duplex — then, explains Birbach, you'd have to adjust the common charges. Seems pretty straight forward.
Accusations, Accusations, Accusations
Typically, if a shareholder or unit-owner plans to renovate, the board has that person fill out an alteration agreement and supply documentation for its approval.
"In the buildings we manage, it's my job to make sure that licensed, properly insured people are doing the work," Birbach confirms. "If God forbid something happens to a contractor — he falls off a ladder — and he doesn't have insurance or worker's compensation, he's going to sue and it becomes a whole problem. You want to know if they're moving load-bearing walls, so that you can bring in an engineer, at the owner's expense, to make sure that's safe. Management has to make sure that the application process is complete and that it's sent it out to the board for approval."
If a disgruntled neighbor believes no alteration agreements were supplied or approved, there are a few recourses. First, he or she can approach the board and ask if it's aware of renovations. Second, if that goes nowhere, he or she can call the Department of Buildings or 311 to report a renovation that may require a building permit. Just keep in mind that some renovations, such as replacing the cabinets, don't require permits. And third, he or she can run for the board. "When management sends out notices for the annual meeting," explains Birbach, "any unit-owner can run. Any unit owner in good standing absolutely has a right to be elected to the board. Whether that person gets enough votes is another story."