In: Property Management
From time to time a Unit Owner or a Shareholder will place an illegal sublet into their unit without the prior written authorization of the Board of Managers or the Board of Directors in that particular building. One Board Member had inquired if they could take it upon themselves to remove the sublet directly or if they needed to go to bat with the Shareholder in question, first.
Certificates of Insurance are one of the most important aspects of information that we can collect from any vendor that is working in a building. Whether they’re hired by the building, a unit owner / shareholder or by a subtenant, all companies that enter into any of our buildings are required to first show proof of insurance.
At the very bottom of this post we have included a pro-forma Certificate of Insurance Requirements that we use within many of our buildings. This includes the standard amounts of insurance that our portfolio of buildings require. They include General Liability, Workmen’s Comp and Auto policies. Each time we collect a certificate we always note that the management company (Excel Bradshaw Management Group, LLC) and the entity that owns the building be named as Additional Insured and as Certificate Holders. This is to protect the building and the managing agent from any damage to the common area, damage to personal spaces and injury to workmen, residents and visitors.
There are a variety of times that the Certificate of Insurance will be required. Those times range from building wide work, personal alterations and decorations to move-ins and move-outs. Lock down those insurance certificates and not only will the management and Board be protected, but so will the assets of all of those unit owners and shareholders.
Pro-Forma Certificate Requirements: Click Here
June 18, 2014
Bed Bugs are a very scary element in any building. Not only can the wreak havoc on the resident that will be most affected by it, but left untreated they can drain a building’s operating account faster than almost anything else.
We always implore all residents in every building to immediately notify Management if they think that they may have a bed bug issue in their unit. We’ll immediately arrange for an inspection of the premises by a trained professional (canine inspection or visual inspection).
If there is a positive for an infestation, we’ll make sure to start the inspection process in all units that are above, below and on either side of the positive unit to try and note where the problem has spread to and to stop the spread with proper treatment.
If the resident is in a Cooperative or a rental building, the “landlord” should be footing the bill for the treatment while the resident is responsible for the costs to prep their apartment (dry cleaning, laundering, cleaning, etc.) The one way to force the tenant to pay for the bed bugs treatment is to pin down that particular unit as the only unit infected in the building (and talk to an attorney about this before you go to charge).
Residents that test positive should never throw away their untreated belongings in the building trash, drag furniture or uncovered mattresses through the building or in any other way increase the chance that the bed bugs will spread. Mattresses that are left on the curb for pickup after treatment (or any time) must be properly covered or the building will receive a fine (in NYC).
The apartment will need to be completely prepped prior to treatment because an apartment that is not fully prepped stands a better chance of not being fully exterminated. The exterminators will use a variety of treatments which include steaming, freezing and dusting, so there are many different treatment options that will be utilized.
Getting on top of this problem from the very first sign will help any building weather through the bed bug storm. Bed bugs can live up to a year without food, so knowing that they’re potentially within the common elements of the building and have the ability to travel should make every building prepare for the worst and have a bed bug plan in place.
Downloadable Bed Bug Disclosure Form: Click Here
Downloadable Bed Bug Prep Sheet: Click Here
Downloadable NYC Bed Bug Pamphlet: Click Here
A lot of building owners and Boards have one thing in common; they’re often-times getting involved in the minutiae that they hire their property management professionals to handle. Whether it’s giving the staff direction on the day-to-day or getting directly involved in tenant affairs, there is potential for a large amount of confusion and misdirection for any and all building staff.
We see this all the time in property management; a resident refusing to give a copy of their apartment key to their landlord or to the building staff in the case of an emergency. In New York, it’s part of the law that the tenant should give a copy of their key to the landlord and in Proprietary Leases for Cooperatives, it notes that the Lessee (shareholder) shall give a copy of their key to the Lessor (Coop Board or representative).
In Property Management there are always residents that are looking to do work inside their apartments; whether that work is invasive and structural or purely cosmetic in nature.
Excel Bradshaw Management Group, LLC has two distinct forms for buildings to consider when residents are performing work. We have a decoration application, which deals with mostly cosmetic repairs and we have an alteration application, which goes into more detail and usually involves all plumbing, electrical and structural work on the interior.
Both applications will require that the company performing the work supply any and all licenses and insurance as may be required. All permits for the work that need to be filed and received from the City also need to be displayed. The resident doing the work will also have to show proof of homeowners or renters insurance to assure the building of coverage in the case of an accident, etc.
If the work is structural in nature, the resident must provide their architects sealed renderings and the building will utilize those to have the building’s architect review, at resident’s expense.
We’re all about locking down the information and providing as much protection to the building as possible. Collecting all of the important and relevant information from the contractors and from the residents prior to the work being approved will go a long way in protecting the building and all residents from unauthorized, or illegal work.
This question and answer came from the forums on Habitat Magazine (http://www.habitatmag.com). The question was pertaining to a Shareholder who had taken on a roommate and wanted to know that if they left the roommate in the apartment without the Shareholder being present, can this be considered a sublet, even if the Cooperative Corporation doesn’t have a “sublet policy” in place.
Minutes of a Corporation are one of the most important documents in Coops and Condos but they’re so much more than just keeping track of what transpires in the meetings of Directors.
They can also be used as discovery in a lawsuit (whether the entity taking the minutes is the plaintiff or defendant) and they can also be used by legal counsel of those who are looking to purchase in the Corporation or Condominium.
We’ve seen a slew of minutes that are so much more than they have to be; sometimes an hour long meeting is summarized in a multi-page document that details every single conversation and every point that is made.
Our recommendation is that all minutes should be bare-boned and contain minimal information while still maintaining the character of all of the decisions that were made at the meeting.
The important items that should be on the minutes include; time, date and place of meeting, who was present / not present, all motions that were made and how they were voted. With keeping these minutes to a minimum, a Board can release minutes to any and all who are requesting them without redaction and they give a clear and concise record of important decisions while protecting the Corporation as a whole. Keeping them simple has an added benefit as well; they can be easily remembered at the next meeting when it is time to approve them.
This is a quick tip to lock down your House Rules to make them more enforceable.
Many buildings have House Rules that are outdated, or even original to the conversion. If the House Rules are outdated and are not providing for infractions and penalties for those breaches, are they really enforceable?
The Board has the authority to amend the House Rules and we recommend that when the House Rules are redrafted, place the specific infractions, penalties and fines that will come with each infraction. By laying this out, each resident will have notice of what the graduated steps will be for any breach of the Rules.
Once they are redrafted, we recommend mailing them out or handing out to each resident. When they do receive these new rules, each resident should sign an acknowledgment form that they both received the rules and after they had time to digest the new changes they should acknowledge that they have read and understand the House Rules as they are now drafted.
In addition to current residents, we also include both the House Rules and the Acknowledgement in all resale, sublet, refinance and transfer packages for each building so that all future residents will have read and understood the House Rules (and we have it in writing).
By following this simple advice, all buildings should be able to clamp down on breaches of the House Rules and can collect on the penalties that will no longer be seen as arbitrary.
**DISCLAIMER** I am not an attorney and this is my opinion based on experience in the field of Property Management. For legal opinion on this and other related matters, it is in any person or Board’s interest to seek independent legal counsel.
In this video, Mark Levine of Excel Bradshaw Management Group tackles the issue of a Cooperative Board’s ability to not approve a sale due to the purchase price that they are presented with. This is a tricky situation, but one that requires diligence on the Board’s part to ensure that the decision they are making is based on market value and not on perceived value.
Before we get into the answer and noting how a Board can avoid running into an issue of wrongly turning down a sale for the purchase price, it is worth going over the protected classes in NYC and noting which factors are not to be considered when making a decision to allow a prospective purchaser pass through the board application process.
Presently in NYC, the protected classes (and these are groups of people who cannot be discriminated against or prevented from obtaining housing based on these factors) are: Age, Alien Status, Children (or childless state), Country of National Origin, Creed, Disability, Gender (including gender identity), Lawful Occupation, Marital Status, Military Status, Partnership Status, Race, Religion or Sexual Orientation.
Now that we have the factors that can’t be considered out of the way, we can talk about what can go into a decision to deny an applicant by a Cooperative Board. Financial instability is, of course, one of the main factors for not permitting a sale to go through. If the prospective purchaser is not able to carry the apartment’s mortgage + maintenance + other expenses, the Cooperative could be placing itself at risk for a default on maintenance and potentially creating a future of legal issues.
There is one other area that should be considered as well; purchase price. Some buildings will try and set an absolute floor, whereby they will alert all Shareholders that they will not accept any sales below a certain amount. This amount could be a per share amount, per square foot amount or if most apartments in the building are similar, they could create an absolute price. This will work only if the Board’s requirements are in line with the present market value of these apartments.
We have run into these situations before where a Board will deny based on a purchase price and the ruling is challenged by the outgoing Shareholder. To counteract this and to also avoid possible legal between the shareholder and the Board, we have taken the step to be proactive. We have advised our Boards that it is in their best interests to hire an independent appraiser to come into the apartment and work up a full appraisal on behalf of the Board so that they can get a sense of the real world market value of the apartment.
An example of how this will work out in the Board’s benefit is an apartment that is under contract for $200k and they feel that the apartment is worth $250k. An appraisal is ordered for the Board and it is actually shown to be $250k. We can then bring that back to the Shareholder to show that we have these findings and we can work it out with the Shareholder and prospective purchaser to raise their contracted price or they can back out of the sale as is if they both cannot meet the new parameters.
Although this approach sounds like the ideal solution, it can have the opposite effect as well, so Boards should be careful and use judgement when they are ordering these appraisals. The flip-side of the equation is that an apartment has the possibility of appraising for lower than the stated contractual price and in that case, the argument that the apartment was selling for below the market value would be thrown out in the courts should a sale be denied based on those factors and then challenged.
Cooperative Board of Directors have to be realistic when dealing with the sales within the building and this is a great tool that could be used on a case by case basis to ensure that the units in the building are being sold at market value and are helping to preserve the comps in the building. Of course, like any other issue in a Cooperative, a little leeway will have the be given from time to time and each board, while trying to preserve their value, should also be using common sense to not hamper the transactions in their building.