Wednesday, March 9, 2016

Failure to Provide A Smoke Free Environment Entitles Co-op Owner to Reimbursement of Substantial Maintenance Fees


A recent decision of a New York trial court proved very costly for a cooperative.
An owner successfully sued the co-op for breach of the warranty of habitability, constructive eviction and breach of contract based on the infiltration of second hand smoke into the owner's apartment.

The New York Real Property Law § 235-b, applicable to cooperatives, provides a lessor's warranty that a unit will be free from any conditions that are dangerous or hazardous to the occupant's life, health or safety.

The co-op was found, inter alia,  to have breached the warranty of habitability by permitting the apartment to be infiltrated by second hand smoke. 

According to the decision, the plaintiff's complaints about the smell of smoke were ignored by the co-op and the plaintiff was forced to vacate.

The court noted that "as a matter of fact, the value of a smoke polluted residential apartment is zero    .  . .    and that the plaintiff is entitled to a 100 percent abatement . . . "  Reinhard v. Connaught Tower Corp., 602503/2008, NYLJ 120275100993 (Sup. NY Decided January 25, 2016)  As such, the plaintiff was entitled to reimbursement of maintenance fees in excess of $100,000.00!

In addition to the abatement of fees, pursuant to the terms of the proprietary lease, as the prevailing party, the plaintiff was entitled to reasonable attorney's fees incurred in connection with the lawsuit.

The decision leaves open questions concerning a co-op's options. Should it to exclude smokers from the building or  "smoke proof" units.

Wednesday, March 2, 2016

In Re Rones Revisited: Court Rules Condo Lien Cannot be Strippped Off



Don't leave money on the table by  assuming  that a Chapter 13 bankruptcy filing by an owner wipes out or limits payment of a  condominium  association's pre-petition claim for unpaid  fees and assessments.

A recent decision of the United States District Court, on appeal from an order of the U.S. Bankruptcy Court, is a solid victory for condominium associations in this regard. The decision impacts the amount of money a condominium association, with a recorded priority lien, will be entitled to receive
when an owner files a Chapter 13 bankruptcy.

Based on the decision, the limited super priority afforded to a condominium claim of lien pursuant to the New Jersey Condominium Act, specifically, N.J.S.A. 46:8B-21 (b)(1), prevents the lien from being stripped off or crammed down under a debtor's chapter 13 plan. Since the lien was entitled to a limited priority over the first mortgage, and was secured by the debtor's principal residence, the lien could not be modified or stripped off.

Therefore, under a Chapter 13 plan, the entire lien will secured and not just the limited super priority portion.