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.