Enclosures, Floor Area Ratio, and Other Legal Issues
Sept. 23, 2015 — The enclosures could jeopardize your floor area ratio. If an enclosure is a certified room it brings up a subtle issue boards must consider: does an enclosed balcony change your building's floor area ratio (FAR) (a measure of your building's maximum allowable use)?
Whether a balcony enclosure will add to your FAR "depends on whether you can characterize it as temporary enclosure," says Kenneth Jacobs, a partner in the law firm Smith, Buss & Jacobs. "If a building is fully built already [to maximum FAR], then any permanent enclosure would be violation of zoning laws." In a related issue, says attorney Abbey Goldstein, a partner at Goldstein & Greenlaw, "you're not adding a [permanent] room [so] you don't have to amend the certificate of occupancy."
Your taxes could go up. However, Goldstein notes, "You're improving the unit — increasing the value as a result of alterations. In theory, that can increase real-estate taxes." And the city keeps tabs. "When you get a [DOB] permit it's reported to the Department of Finance," he says. "Some boards will get some indemnification [from the apartment-owner] for any increase but you don't generally know how to allocate it — you don't know how much is attributable to that enclosure." Depending on many factors this may or may not be an issue; talk to your accountant.
Finally, do enclosed balconies require boards to reallocate shares? "Theoretically, when someone bought the apartment, the balcony had shares allocated to it, as opposed to apartments without balconies," says Timothy Grogan, president of the management firm Grogan & Associates. "Boards have to determine if the value of [an] apartment is worth more based on the value of outdoor space versus indoor space."