An attorney discusses alteration agreements in co-ops and condominiums

Despite the economy, there is still a great deal of renovation work going on in co-ops and condominium apartments. While condominiums have traditionally been more "liberal" in allowing renovations, even they have become stricter as problems have arisen. The most common method for documenting and enforcing renovation rules and restrictions is an "alteration agreement." It is essentially a contract between the building and the party desiring to renovate to ensure that they comply with the law and complete their renovation without damaging the building and building systems or damaging neighbors in the building. While it is a very important document, people tend to mistakenly believe that it means that the building will "protect" them against anything that may happen. That is why it is important to understand what it does and does not do. The signing of an alteration agreement does not mean that the co-op or condominium building is "protecting" you and looking out for your interests like a construction manager or an owner's representative might. The building is protecting itself, to try to ensure that the party doing the renovation does not damage the building and other neighbors. The building and its managing agent try to ensure that the party doing the renovation complies with the alteration agreement, but if something arises where there was noncompliance, the building can point to the alteration agreement and ask the unit owner or shareholder to correct it. So if the plumbing work does not turn out the way the apartment owner expected, they cannot blame the building and say, "But you should have noticed that." Buildings also vary in how involved they are in monitoring the construction work. Often it is just the building super or the managing agent who periodically stops by to have a look at the work, even though the building is within its rights to have an architect look at the work and charge back the apartment owner. Some buildings do not do much checking at all, unless there is a problem. Another area where apartment owners have a false sense of security is the fact that the apartment owner is required by law to use a licensed home improvement contractor. The building does not tell the apartment owner that they need to do this. All the building requires is that the apartment owner complies with applicable laws. So when the issue comes up that the contractor did not have this license and the work is defective, the apartment owner cannot say, "But the building never told me I needed to have that." In the same vein, the building does not check on whether the apartment owner is using a "good" contractor with a "good" work record. They just want a certificate of insurance, so that if things do not work out and the contractor causes damage, the building will be protected. Even then, there can be problems with contractors giving improper certificates of insurance from other companies, when it is supposed to be from their company. Another thorny issue I see a lot of has to do with liquidated damages. Some co-ops require that work be completed within a certain number of weeks or months. For each day the work goes beyond that date, the shareholder must pay a sum of money to the co-op. It could be as much as $1,000 per day. The shareholder will usually pass this obligation on to the general contractor. Thus, if the shareholder has to pay the co-op, the general contractor will have to reimburse the owner. This underlines the importance of having a knowledgeable attorney prepare the contract for the construction work, so that all these important issues are addressed. Co-ops, condominiums and anyone living in them who plan to renovate, need to be well-advised by knowledgeable legal counsel of the issues which may arise. C. Jaye Berger is an attorney with the Law Offices C. Jaye Berger, New York, N.Y.