Answering the Day-to-Day Questions Thoroughly Review Your Governing Documents

 Your roof terrace leaked and the neighbor below you sued for damages. The  heating system in your apartment failed to work and the managing agent sent you  the bill for its repair. You bought a dog for your child, and six months later  the board has demanded that the animal be removed from the building. What are  your options in these scenarios?  

 The answers to questions like these can usually be found in a building’s governing documents. Whether these documents—which include the proprietary lease (in the case of a co-op), the bylaws and the  house rules—are filed in your attorney’s office or on-site with your other important papers, they should be reviewed  periodically. Their contents govern the terms of your ownership as well as your  rights and obligations.  

 A Hierarchy of Documents

 In order to understand how various laws and rules work to govern multifamily  buildings, it may be helpful to view them in a hierarchy.  

 At the top, in a co-op, is the Certificate of Incorporation, which is filed with  the Department of State. The equivalent for condos is the Declaration of the  Condominium. These documents may contain specific provisions for making  amendments. If it’s not available in the building’s files, a copy of this document may be obtained from the Secretary of State,  Department of State, Division of Corporations, in Albany.  

 Next in the hierarchy are the bylaws of the co-op corporation or condo  association. The bylaws govern how business is conducted within the building:  its form of government, election and voting process, the type and frequency of  meetings, the specific form of agenda for meetings, a description of the board  and number of officers, as well as their duties and responsibilities.  

 Also included in the bylaws are rules about how board members may be changed,  removed, or appointed. Perhaps most importantly, many bylaws contain specific  guidelines for amending their contents. The bylaws of a condo contain other  significant provisions regarding the form of ownership, a description and  operation of the property, and the duties and responsibilities of its owners  and occupants.  

 Since condo owners possess real property rather than shares in a corporation,  there is no proprietary lease in a condo. Therefore, most condo bylaws contain  special provisions relating to the sale and rental of units and the approvals  or waivers required in order to allow clean transfer of title. Failure to  adhere to these requirements may result in the transaction being voided under  law.  

 In both co-ops and condos, the bylaws are the primary tools for exercising your  rights as an owner/shareholder. They provide you with your right to vote and  the manner in which your vote takes form. The bylaws also define who may be a  director or officer, and may allow you to implement new organizational and  management policies.  

 Any change to the bylaws should be prepared by an attorney, presented to the  shareholders or owners in the specific manner and form specified. Changes to  them should be filed with the Attorney General of the State of New York as an  amendment to the plan so it is formally part of the public record.  

 The Proprietary Lease

 One document in the hierarchy that only pertains to co-ops is the proprietary  lease. Granted by the corporation when the shareholder purchases shares, the  lease spells out the rights and responsibilities of the shareholder and the  co-op corporation. It is the most important document in terms of the day-to-day  relationship between the shareholder and the corporation. The shareholder is  responsible for paying maintenance fees and is given the right to occupy the  premises and the right to quiet enjoyment of the apartment. He is protected  under the umbrella of a warrant of habitability issued by the co-op  corporation.  

 In most cases, the proprietary lease clearly defines all the provisions related  to the use of the apartment including occupancy, modification, repairs and a  host of other significant items. By and large, a condo’s bylaws and house rules provide the same directives. In order to change the  provisions of a co-op’s proprietary lease, it is necessary to refer back to the bylaws and the terms  of the lease itself to determine exactly how those changes can be made. Any  changes should be drawn up by an attorney and then filed with the Attorney  General’s office so it becomes part of the public record.  

 Defining Inappropriate Behavior

 At the bottom of the hierarchy of governing documents but certainly no less  important are the house rules. Almost always incorporated into the proprietary  lease for the co-op or the bylaws of the condo, house rules generally deal with  very specific living requirements in and about the building, and tend to be  associated with quality of life issues such as pets, noise, and garbage  disposal rules.  

 Under the terms of the bylaws and proprietary lease, the board of directors has  the unilateral right to amend house rules without resident approval. It would  be prudent, however, to solicit comments from residents before imposing  requirements, which may be both difficult to adhere to or enforce. Changes to  the house rules need not be drafted by an attorney, but should be distributed  to all present and future owners. The transfer agent, board secretary or  managing agent should assure that the proprietary lease or the bylaws contain  the most recent set of house rules for any new owners. It is incumbent on the  managing agent and the board to review the house rules and to update them as  necessary. It is incumbent on all owners to take the time to review these rules  periodically to avoid embarrassing situations or inconveniences.  

 A Wealth of Knowledge

 Even if you are already knowledgeable about your building’s governing documents, you may want to revisit them every few years. If you are  reviewing them for the first time, start with the offering plan, and move on to  the proprietary lease, followed by the bylaws and house rules. Read them cover  to cover. Contact your managing agent or the organization’s attorney to assure that you have all the amendments that have been filed. The  entire effort may only take a few hours, but the result will be a wealth of  knowledge. It is your right to be informed, and to be able to make decisions  based on this knowledge. It may also save you time and money in the future.   

 Irwin H. Cohen is founder and CEO of A. Michael Tyler Realty Corp., a  residential property management firm based in Manhattan.  

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