New York based property management firm, All Area Realty Services blog. Find tips for Co-Op Boards & Residential Building Management.

A Co-Op Board Fights Sublets with Airbnb Records

Posted by All Area Realty Services Team on Nov 15, 2018 1:17:37 PM

In recent news, a co-op board filed a lawsuit to terminate a tenant's proprietary lease due to illegal subletting. The co-op building's property manager caught some suspicious looking visitors coming and going from the accused resident’s apartment. He notified the board immediately, and with some digging, they found the tenant was subletting the space on Airbnb. Eventually, due to the resident’s unwavering denial, the co-op board had to subpoena Airbnb’s records for indisputable proof. To this day the case is still ongoing in court. Here are three steps you can take to prevent a similar scenario from happening in your building.

Preventative Measures

If resident’s renting out their apartment, on major concern is that there needs to be policies in place that make Airbnb-ing more difficult. Some examples are:

  • A rule prohibiting guests from staying in an apartment without the tenant-shareholder.
  • Prohibiting doormen from holding keys for guests.
  • Prohibiting the doormen from allowing guests in who haven’t been approved.
  • A rule prohibiting guests from entering who aren’t accompanied by the apartment owner.
  • Creating a system where guests have to register with the building before entering. 

These rules if enacted make it harder for residents to have a constant flow of strange guests entering and leaving the building. 

First Warnings 

If a unit owner has found a way around the rules and is using the apartment as a short-term rental, the first step is to send a letter to the resident demanding they stop. This letter does not have to be a formal warning and can come from the board or your property manager. Although a lawyer is not necessary at this point, but a lawyer could also send the warning letter. 

If the resident ignores the first warning and persists, the next step is to check your by-laws. These will hold all the provisions against short-term rentals and rules informing you how to notarize the resident that they are in violation. You should have a formal warning written up and signed by the co-op board president. A formal notification such as this will put your board in proper legal standing, if legal action becomes necessary. 

It is important to note that in co-ops the board is also required to notify the tenant-shareholder’s lender. This may seem like an annoying extra hoop to have to jump through, but it actually could work in your favor. The lender may also start urging the tenant to stop subletting the apartment, giving the tenant extra pressure to cease their activities. 

For condos the by-laws may give the board the right to fine a resident for violating the rules of the building. This could prove to be a helpful step in preventing legal action. 

Taking Legal Action

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After you send a formal warning the owner or shareholder has 30 days to end their illegal activities. If they continue to rent out the apartment, your next step is to check the by-laws or proprietary lease for your building's policies on recovering legal fees from a resident

A co-op has the option to start the process of a “Pullman Case” to evict the shareholder on “objectionable conduct.” A condo has to go straight to the New York Supreme Court to request an action for declaratory judgment against the accused resident. This option is also available to co-ops, but unlike condos, they also have the choice of housing court

In court you'll need to state that by violating the rules, the owner is challenging the authority of the co-op board to enforce rules. Next, ask the court to declare that the board has the right to enforce the rule and permanently prohibit the owner or shareholder from violating the rules in the future. As long as you come prepared with evidence you should win the case. 

All in all legal action should be your last resort, as it can potentially cost tens of thousands of dollars, not to mention the stress and hassle of the process. The benefit of going to court is that if the resident fails to comply they can be held in contempt of court. Again, this should be a last resort. Hopefully, if you’re dealing with a resident who is renting out their apartment on Airbnb, or any other source, they will cease their disruptive activity after receiving their first warning. 

If you serve on a co-op board or condo board and need professional property management services, contact All Area Realty Services and find out why our over 30 years experience and loyal clients makes us experts.

All Area Realty Services is New York City’s leading real estate management company specializing in full-service property management for cooperative and condominium boards in the Manhattan area. 

 

 

 

 

 

 

 

Topics: Co-Op Board, Property Management, Condo Board Association, Co-Op Building, Co-Op Board Lawsuit

A Right Of First Refusal Explained by All Area Realty Services

Posted by All Area Realty Services Team on Nov 7, 2018 3:29:14 PM

In a condominium, unlike a co-op, the board doesn’t have a large amount of leeway when approving or rejecting a proposed sale. A Right of First Refusal is a way for the board to step into a proposed deal on a condominium on behalf of all unit owners, instead of allowing the deal to go through. 

When would a condo board use the Right of First Refusal?

The vast majority of the time the board will waive their Right of First Refusal and allow the sale/leasing of the property to progress. A couple of examples of when it would be in their interest to use their right are:

Example 1:

If there is a proposed sale between two family members at an extremely discounted price.

In this scenario, the building's board could buy the apartment to keep for staff, they could flip it at a higher price, or they could lease it out to a renter. The board would want to intervene in this scenario because if an apartment sells at a value much lower than the market value, it will affect the value of the whole building. 

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Example 2:

If the proposed sale is with such an objectionable purchaser that allowing them into the building could disturb the overall peace in the building or if they have a proven record of financial misdeeds. 

In this scenario, the board could again use their Right of First Refusal to prevent the purchaser from entering the building as an owner. 

How to discover if a condominium has a Right of First Refusal.

To find out if a condo has a Right of First Refusal you should refer to that buildings Offering Plan. It is important to investigate and discover if the building holds the right because not all condominiums do. Even some of the condos that do, only have the Right of First Refusal on their commercial units, if it is a mixed-use building. 

The truth is that the vast majority of condominium sales do go through undisturbed. However, it is important to always arm yourself with all the information before a major purchase, like that of a condo. A condominium could or could not have a Right to First Refusal, so it is important to look at the buildings Offering Plan to ensure that your purchase goes through smoothly and with the outcome you’ve hoped for.

If you serve on a co-op board or condo board and need professional property management services, contact All Area Realty Services and find out why our over 30 years experience and loyal clients makes us experts.

All Area Realty Services is New York City’s leading real estate management company specializing in full-service property management for cooperative and condominium boards in the Manhattan area. 

Topics: Co-Op Board, Condo Board Association, Buying a Condo, Co-Op Building, Co-op Insurance, Co-Op Board Lawsuit

Handling Lawsuits As A Co-Op or Condo Board

Posted by All Area Realty Services Team on Oct 2, 2018 4:14:43 PM

Lawsuits are expensive and time-consuming, and can quickly turn into a financial burden. And unfortunately in some cases it is the only option for resolution.

The Basics

The most common lawsuits include noise complaints between neighbors, construction defects in units, and attempts to collect delinquent payments from residents. If you are the defendant the lawsuit will begin with you being served with a complaint. You will have 20 days to answer the complaint with either an answer or to file a motion to dismiss. You can seek to dismiss the complaint on two grounds: you can say that suit is not strong enough for “a cause of action” or you can try to dismiss by virtue of an “affirmative matter.” 

Also, keep in mind most cases are settled before the going to trial, or the completion of a trial. 

iStock-660743394Don’t Go Through a Lawsuit Alone 

If you attempt to resolve the dispute yourself it could ultimately create more legal challenges. You could find yourself in the trap of selective enforcement. Inconsistent rule enforcement could not only get you in trouble, but empty threats can result in issues as well. In the first phase of a lawsuit, the involvement of your attorney is crucial in steering you to a successful path to resolution.

Although all lawsuits are public record if you have an attorney all of your discussions will be protected by the attorney/client privilege. If you discuss the lawsuit or seek advice to anyone else you will not have this confidentially protection and could have personal information about the lawsuit leaked. 

It is important to note that if you’re covered by general liability insurance or Directors & Officers coverage you could have your defense provided by your carrier.  

How Much Will a Lawsuit Cost 

Predicting the cost of a lawsuit is difficult. The more actions necessary to take place during a lawsuit and the longer it is all run up the price. If you come into the situation with reasonable expectations, a willingness to compromise and communicate you can really save yourself a lot of time and money. 

Alternatives 

You can try to meet with the other party and resolve the issue amongst yourselves. However, as mentioned above this is a gamble and could end up costing you even more money in the end. At the very least an attorney should be present as a mediator. 

The Consequences of Constant Litigation iStock-478524467

A long history of litigation may hurt your standing with prospective buyers and lenders. Prospective buyers may question the building’s financial stability, if the board is ruling effectively, or if the residents have hostile relations with the board. Also, lenders may take the constant litigation into consideration when underwriting their loans. 

Lawsuits can be expensive and time-consuming experiences. However, if you keep all the points above in mind it can help to cheapen and shorten the time span of your lawsuit. 

If you serve on a co-op board and need professional property management services, contact All Area Realty Services and find out why our over 30 years experience and loyal clients makes us experts.

All Area Realty Services is New York City’s leading real estate management company specializing in full-service property management for cooperative and condominium boards in the Manhattan area. 

Topics: Co-Op Board, Condo Board Association, Co-Op Building, Co-op Insurance, Co-Op Board Lawsuit