Laws Versus Rules

You Need to Know the Difference

By Raanan Geberer

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 New York's co-ops and condos are both governed by a multitude of laws and rules.  For co-ops, the primary governing documents are the bylaws and the proprietary  lease. For condos, they are the condominium declaration and, once again, the  bylaws. In addition, both types of developments have rules and regulations, or  house rules.  

 In addition, co-ops and condos, like everything else, are governed by laws. In  New York State, co-ops are covered under the Business Corporation Law. Condos,  on the other hand, are covered by the New York Condominium Act. There are also  other housing-related statutes that cover dwellings of all types.  

 Laws are passed by the state Legislature (the Assembly and the state Senate) at  the state level, or by the City Council at the city level. House rules and  amendments to a building’s governing documents are generally set by the co-op or condo board, although  the board may decide to take a particular issue to a referendum at times. Since  life in New York City and its suburbs is so complicated, it follows that there  are times when laws and rules and/or governing documents, on one hand, and  laws, on the other, may conflict with each other.  

 Hot Topics

 Co-op and condo attorney Jeffrey Reich, a partner in the Manhattan law firm of  Wolf Haldenstein Adler Freeman & Herz, LLP, says the main point of contention nowadays is the pet law. “The so-called pet law,” he says, “requires that if a pet has been openly in residence for more than nine days, you  can’t get rid of the pet. The pet law is a city law, but some developments have  no-pet laws.”  

 Another example Reich gave involves buildings that seek to prohibit any type of “home occupation,” meaning the use of an apartment for one’s livelihood. Zoning laws in New York, he says, allow an inhabitant to use part  of his or her home for “home occupation” —to practice accounting, therapy, or similar professions—but some buildings still want to ban them.  

 Yet another area of conflict, he says, includes cases where boards expect the  shareholders or unit owners to install window guards, smoke detectors, carbon  monoxide detectors or the like. “But the actual law that requires these things,” says Reich, “may be placing the burden on the board itself.”  

 Attorney Phyllis Weisberg, a partner in the Manhattan law firm of Montgomery  McCracken Walker & Rhoads, LLP, mentioned having roommates as a possible area of contention. The  traditional “typical use” clause in a proprietary lease says a lessee shall not, without written consent,  use the apartment for any purpose other than a private dwelling for the lessee,  his or her spouse, children, grandchildren, parents—in other words, blood relatives. However, says Weisberg “The so-called Roommate Law requires that roommates be allowed, subject to the  provisions of that law, regardless of what the lease says.”  

 In fact, any number of situations could result in conflict between laws and  rules—no-kids policies vs. age discrimination laws, noise regulations, political and  other “free speech” signs vs. house rules governing aesthetics; and even medical marijuana use in  non-smoking buildings (although we trust that this would be more of an issue in  Colorado than New York nowadays).  

 Sometimes, laws that are enacted that mandate change can cause conflict with  co-ops and condos that are used to doing things a certain way. For example, the  Fair Housing Amendments Act mandates that a multiple dwelling with a parking  lot must provide reasonable accommodations for disabled people who drive, and  not to do so entails discrimination.  

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 This was the background for the Shapiro vs. Cadman Towers (in Brooklyn) case, in which the building’s management had argued that “reasonable accommodations” should not include taking away parking spaces from those residents who already  have them. In the end, according to attorney Adam Leitman Bailey of Adam  Leitman Bailey PC, the court ruled that although Ms. Shapiro needed a space  near her apartment or else he wouldn’t be able to park at all, she could be given such a space currently used by one  of the building workers, and that worker could park in a nearby commercial  garage without any hardship.  

 As if these conflicts were not enough, there are also conflicts between state,  city, and federal laws or mandates, says Bailey. “The biggest challenge to housing laws from a federal perspective in the last two  decades,” he says, “are the green laws, or federal credits for building green, and the compliance  with the lead paint law and building disability-friendly units.” Coming in the future, he says, are regulations requiring more buildings to have  federal flood insurance to refinance and get a mortgage.  

 Condos vs. Co-ops

 How do co-ops and condos differ as to how local, state or other laws govern the  way they conduct their own business?  

 Attorney Ronald Gitter, who runs the www.coopandcondo.com blog for co-op and  condo sellers, buyers and owners, explains, “A co-op operates, to a great extent, like any other business corporation and is  subject to the Business Corporation Law. They elect directors and officers and  authorize officers of the corporation to act in accordance with the Business  Corporation Law. A co-op looks to the principles of corporate law. This is very  different than the way a condo operates. A condo is completely a creature of  statute, created by the Condominium Act.”  

 Another answer has to do with the relationship between the owners and the board.  Co-op shareholders, says Weisberg, are considered to be in a landlord-tenant  relationship. “Therefore,” she says, “laws generally applicable to that relationship, as for a rental building, will  apply.”  

 Indeed, lawyers and articles in legal publications often refer to co-op  residents as “tenant-shareholders.”  

 “Condos, however, do not have a landlord-tenant relationship with their unit  owners,” says Weisberg. ‘And so many of the laws that apply to co-ops, such as, for example, the Warranty  of Habitability [which gives tenants the legal right to a livable, safe and  sanitary apartment] do not apply to a condo.”  

 These legal differences can translate into “facts on the ground” in a variety of ways. For example, says Reich, there are both city and state  rules that an apartment building must have a superintendent. However, he says,  this has been interpreted by courts to the effect that in a condo, because each  unit owner is considered an owner by law, the condo board may not have to have  a 24-hour on-site super.  

 “Courts treat condos and co-ops the same in some cases, such as the Pet Law, and  differently otherwise,” he says. This can even vary by location – between courts in one borough and another, or one municipality and another.  

 Avoiding Conflict

 Getting back to the “rules” side of things, house rules, as we’ve mentioned above, are typically decided by the board. The board’s governing documents, such as a proprietary lease, offering plan and bylaws, “were based on old residential lease forms and are decades old, so progressive  buildings have been amending these so that the hand fits the glove of these  buildings,” says Bailey.  

 So what precautions should boards take to make sure that their house rules aren’t going to come in conflict with the law, and to keep up with changes in the  law? First. they can consult with their managing agent, and/or an attorney  familiar with co-op and condo law, and ask a lot of questions. Other sources of  information are publications like this one, seminars given by co-op and condo  organizations (as well as The Cooperator'sannual Co-op & Condo Expo), and newsletters and websites put out by attorneys that give  updates on the law.  

 With all the help available to boards and managers, however, conflicts between  laws and rules still exist. Weisberg recalls that a number of years ago, some  co-ops enacted “flip taxes,” or fees paid by buyers or sellers of co-op apartments when the apartment is  sold, by authority of board vote only, without a corresponding statute. “They were challenged in court and held to violate New York laws, specifically  the Business Corporation Law, or BCL,” she says. Subsequently, though, the BCL was amended by the state legislature to  allow for flip taxes, provided that they were enacted in accordance with the  amendment.  

 Reich cited a recent situation in which a board he represents proposed a rule  that pet-walkers who are not shareholders (such as professional dog-walkers)  would have to use the service elevator. “A shareholder vehemently opposed this—she didn’t feel her pet should have to take the service elevator. She felt the pet should  be able to `ride in style.’ But we’re standing firm.”  

 Bailey says battles over second-hand smoke are among the most hotly contested  items in today’s condo and co-op world. “The law is still being developed respecting second-hand smoke,” he says. “At present, there are few recorded cases but, given the amount of poor new and  renovated construction that occurred over the past decade, it is likely there  will be a significant amount of litigation over smoke issues in the near  future.”  

 In an article on his website called “Advising Condominiums, Cooperatives and Landlords on Smoking Issues Affecting  Buildings,” he outlines the issue and gives sample lease amendments and sample letters from  the board to an individual owner. He also summarizes specific cases dealing  with the issue.  

 Does the whole topic of rules and laws corresponding with each other sound  confusing? It certainly can be. In general, before boards enact changes to  house rules or policies, they should consult their attorneys to make sure  everything’s legal. 

 Raanan Geberer is a freelance writer and a frequent contributor to The  Cooperator.

 

 

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