Imagine an older condo building in a neighborhood undergoing
gentrification. New residents are moving in, bringing their money and,
in the eyes of the old guard, shaking up the building. Sometimes the
parvenus completely renovate their apartments to previously unheard-of
standards; sometimes they simply propose major changes to how the
building is run. In either case, the result is clashes between the
board and new residents.
Now, some real estate attorneys believe that the pressures of
gentrification may be bringing about even more of these occupancy
disputes.
“People come in; they have money; they want better services,” said
Doug Heller, a partner with Herrick, Feinstein. “You go into some of
these older buildings, and the … board is [elderly], and they don’t
want to spend anything on anything. And you’ve got people coming in who
want to do major alterations to their places.”
Sometimes, the condo and co-op boards simply haven’t had to deal
with these types of alterations prior to the area gentrifying, so they
can be lax in enforcing their own rules.
“Nobody really was worried about things like basic alteration
agreements — who’s responsible for what — because nobody had seen any
alterations,” Heller said. “Then, all of a sudden, all kinds of
problems can happen. The board wasn’t operating under a system that
expected this kind of thing, and they feel pretty helpless, because
they haven’t taken adequate precautions.”
He continued, “The older people are just taken by surprise by some
of the improvements the young, wealthy people want to do. This is not
uncommon. It happens everywhere it’s gentrifying.
“It’s been going on in Manhattan for quite a while — for instance, [it started] in Washington Heights a few years ago.”
Since the state’s Housing Court doesn’t enumerate these types of
condo and co-op board conflicts, it’s hard to determine if there has
been an increase, although anecdotal evidence from real estate lawyers
would seem to indicate that there has been.
Each year sees tens of thousands of these types of cases in the housing courts in the five boroughs, attorneys said.
“As alterations, apartment expansions, apartment consolidations and
combinations are becoming more prevalent than previously, we’re seeing
more cases” where boards are failing to review plans carefully or
monitor their execution, said real estate lawyer Eva Talel, a partner
at Stroock Stroock & Lavan whose specialty is representation of
condo and co-op boards.
“The whole issue of alterations becomes very challenging for a
board in terms of, on the one hand, giving the shareholder the benefit
of what they were seeking in doing the alteration … and on the other
hand, protecting everyone else in the building,” she continued.
Lisa Breier Urban, a managing partner and co-founder of Breier
Deutschmeister Urban & Fromme, said she has seen misunderstandings
erupt at properties in Harlem. In one building, which Urban declined to
identify, garbage disposal became an issue.
“The old board was leaving the can out in front, and the newer
members came in and didn’t want that, because people were rifling
through the garbage, so they wanted to set up some other type of
system,” she said. “There was a whole to-do.”
The cans remain unmoved, she said.
Steven Wagner, a managing partner with law firm Wagner Davis, said
another big issue that can often lead to occupancy conflicts these days
is how to spend a building’s money, or the “nurseries versus
gymnasiums” debate.
“I’ve seen that a couple of times, but in each case I’ve seen it,
everybody’s trying to accommodate everyone,” he said. “First of all,
the gym is a nice amenity, but how can you say ‘no’ to the kids? So in
the co-ops I’ve had, people have been making room for both, or none.”
Attorney C. Jaye Berger said there is increasing tension due to
gentrification, but no trend toward increased litigation, because, she
said, poorer people typically can’t afford it.
“You do have these real strange anomalies of old people who’ve
lived in a building for a long time, and you could even still have
renters in some of these buildings, or people who bought for very
little money, and then you have the people who bought years down the
road when the apartment’s been flipped a few times, so they’re paying
millions of dollars,” Berger said. “You’ve got people who are in very
different financial situations, and that’s really where the problem
lies.”
Scott Mollen, a partner at Herrick, Feinstein, agreed.
Mollen said many unit owners in such situations choose not to
litigate, because it’s expensive and difficult to overturn a board
action, and it could also antagonize a co-op board, which will
ultimately approve or deny whoever the tenant presents as a potential
buyer of the unit.
“Conflicts between unit owners and their boards are not new,” noted Mollen.
Mollen said the typical conflicts seen at older buildings are usually a result of new residents clashing with older ones.
“It’s very common to have tension between [older] and younger
owners in condominium and co-op developments because many of the
incoming owners are anxious to live in a building they think provides
competitive services with other buildings they view as first-rate,” he
said. “They believe in the long run, such improvements will help
maintain and enhance the value of their investment.”
While the Housing Court acts as a catchall for occupancy issues,
Talel, who is the chairwoman of the New York City Bar Association’s
Cooperative and Condominium Law Committee, said that since 2006, the
Bar has offered a mediation service that is intended to shift some of
the pressure off the Housing Court by trying to resolve feuds before
they go to court.
Talel also said that quarrels over quality-of-life issues in the city are on the rise.
“Tobacco smoke, noise, those kinds of issues … are leading to an
increase in disputes between apartment owners,” she said. “These kinds
of disputes, rather than involve the whole building in them, might be
better served and better resolved and more amicably and quickly
concluded through mediation.”
If a condo or co-op board does face a lawsuit, Heller recommended it get an attorney if it doesn’t have one.
“If they aren’t equipped with a good,
solid condo attorney, and a lot of them aren’t in fringe areas, they’re going to [need to] get one fast,” he said.
And since many of the lawsuits popping up in developing areas may
be a result of alteration issues, Talel suggested that condo and co-op
boards develop a good alteration agreement for buyers to sign and make
sure that professionals monitor any alterations closely for compliance.
The cost of developing the agreement, along with the professional
contractors used, should be borne by the residents doing the
alterations, she said.
“There is nothing more destructive in a building than an alteration that’s gone wrong,” Talel said.
“It can result in litigation for sure, and extremely bad
relationships, and can have a tangible negative impact on building
infrastructure or neighboring apartments,” she said.