Many condominiums have, as part of their by-laws, a section that limits spending by the Board of Managers on alterations, additions and improvements without first obtaining approval of the unit owners.
Condominium Boards of Managers are also charged, elsewhere in the By-Laws, with the responsibility to maintain, repair and replace the common elements. Unit owners opposed to spending by the Board often attempt to curtail such spending by invoking the requirement for unit owner consent.
This scenario was recently (April 2009) considered by the Appellate Division, Second Department in the case of Helmer v. Comito. The Board of Managers of Clermont Condominium II in RocklandCounty contracted for repair and maintenance work to be done to the roofs and to remedy other “deficiencies” in the buildings. Several unit owners challenged the Board’s authority to enter into such a contract without first obtaining the unit owner approval required for alterations or improvements which cost more than 25% of the estimated annual budget as set forth in the condominium’s governing documents.
The Appellate Division found that there is a distinction between performing “repairs and maintenance” to the common elements, which does not require unit owner approval, and performing “alterations and improvements,” which would trigger the unit owner approval requirement.
The Court found that the condominium had experienced roof leaks and that toxic mold had been discovered in some of the units. These defects and the needed repairs were confirmed by architectural and engineering firms retained by the Board. The Court further noted that the Board, in classifying the proposed work as “repairs and maintenance,” had relied in part on the Village Building and Zoning Department’s determination that the work was “of a repair/maintenance nature and does not require a building permit.”
Once the Court found that the Board had acted within its authority in entering into the contract, the Court ended its inquiry in accordance with the principles of the business judgment rule and dismissed the unit owners’ complaint.
The Helmer decision cited to, and concurred with, an earlier decision of the Appellate Division, Second Department. In the 2007 case of Andrea v. Pomona Park, the condominium Board of Managers decided to replace the roofs, gutters, leaders, entry doors and decks in the community. The Court ruled that the replacement of existing building components that had fallen into disrepair was within the Board’s authority and, pursuant to the condominium by-laws, did not require unit owner consent. The provision of the Pomona Park Condominium (also coincidentally located in RocklandCounty) by-laws which required unit owner consent for “alterations, additions and improvements” was found by the Court to be “not applicable to the project.”
Both the Helmer and Andrea decisions, in finding that the proposed work did not require unit owner approval, paid particular attention to the fact that the construction was necessary due to leaks, damage, deterioration, etc. as opposed to discretionary.
A condominium Board of Managers should consult its governing documents to determine if it is subject to similar provisions as appeared in the cases cited above. The Board should then consider each proposed task to determine if it constitutes a “maintenance, repair or replacement” project or an “alteration, addition or improvement.” The line between these two categories may become blurred, for instance, when the needed replacement of a common element is a significant improvement over the original installation. As in the Helmer v. Comito case, the Board may be advised to consult an engineer, architect, local building department and/or other experts to assist in its determination and to bolster its position in the event of a legal challenge.
