Several interesting court decisions regarding co-ops and condos were made during the latter part of 2005. The decisions received some commentary, but perhaps not the attention that they deserve. In a condo case, the Appellate Court that oversees the trial courts in Manhattan and the Bronx made a decision that clarifies when a condo unit owner may be subject to liability in connection with the condo’s common elements. And New York’s highest court issued a decision changing how one determines whether a co-op shareholder is a holder of unsold shares (i.e., a shareholder who typically has special privileges, such as being able to transfer and sublease without board approval). Some other notable decisions provide valuable lessons.
Ira Pekelnaya, as Guardian Ad Litem for Michael Taratuta v. Jerri Allyn. Lesson: Condo unit owners are not liable individually for injury or damages that result from common elements, which they do not control.
This Appellate Division, First Department, decision may be one of the most significant court decisions regarding condos in recent years. The question was whether condo unit owners could be held individually liable for injury caused by a defect in a common element. In this case, a common element chain link fence on a parapet-wall fell and struck plaintiffs. The plaintiffs sought money from the condo unit owners who they argued were liable for the condo board’s decisions with respect to the fence. In a well-reasoned decision by Judge Tom, the court held that there is no liability imposed upon individual unit owners based solely upon their ownership in the common elements.
According to the court, it is control, not common interest that is the operative criterion upon which liability is predicated. “In the absence of such control by the individual unit owners over the common elements alleged to be defective, this court concludes that the individual defendants cannot be held answerable in damages.”
The court found that the condo form of ownership was a creature of statute and subject to strict construction. There is no provision in the law governing condos that imposes liability on unit owners for injury caused by a defect in the common elements. The court was impressed with plaintiffs’ point that a condo is not required to maintain liability insurance which may cover damages. The court went so far as to “urge legislation to require a condominium to obtain a minimum amount of liability insurance coverage in such amount as may be deemed adequate to protect the public.”