Key components for New York cooperative apartment renovations, part 1

Anyone who has been involved in a renovation of an apartment in New York City knows how complicated and possibly contentious this endeavor may be.

It is critical to understand the apartment alteration process in order to avoid conflicts and potential lawsuits which may be extremely drawn out and costly.

For a successful renovation,  these are important considerations for both apartment owners and coop board members:

• Renovation plan: Before submitting the application to either the managing agent or the board, the apartment owner should have a well-formed renovation plan. This plan should be worked out with a fully insured, trustworthy architect or if needed, an engineer, and a contracting firm.
  • Prospective Purchasers: know before you buy:
    • If you are in a process of buying an apartment that needs work, prior to signing the contract of sale, ask your attorney to review and explain to you the process and the alteration agreement (or alteration package) itself, so you have an idea of what to expect. Some cooperatives have extensive alteration packages with numerous requirements, which may be difficult to navigate if you have never done this before. This will give you an idea of the types of professionals you will need to hire, the amount of insurance your contractor needs to maintain, application processing fees, and the amount of security deposit (i.e. many times it is a percentage of the total renovation project sum).
    • Cooperative’s attorney, engineer and/or architect, and managing agent are all involved in the alteration application approval process and the renovation. Most of the time, the cooperative professionals’ fees need to be reimbursed by the shareholder. Remember to add a cushion to your alteration budget to cover these fees.
  • Cooperative Board: anticipate and act:
    • At some point in time, just about every cooperative board will face the question of how to handle proposed alterations by shareholders in the bundling and must be prepared to deal with the review and approval process for those requests. However, many boards do not anticipate how complicated and long a process this could be. A good time to establish  clear alteration procedures and policies is not when a shareholder first asks the co-op for approval but now, so the board and the agent can create a well-rounded alteration policy and are prepared to deal with the request whenever it is received.
    • In creating an alteration alteration policy , procedure and package, the board should consider consulting with the following professionals;
      • • Property Manager: the property management company is typically equipped with various resources and expertise concerning the alteration process and can advise the board on such matters. Schedule a meeting with your property manager and discuss creation or revision of your building’s “alteration package.”
        • Architect/Engineer: identify and sign necessary agreement(s) with the architectural/engineering firm, so when the time comes to review the shareholder’s alteration plans, the board does not need to perform an extensive search and rush with negotiations with an architect or engineer. If the board employed any particular engineer or architect in the past, perhaps it is a good idea to approach them first, as it is possible that they already know about the building’s structure and systems and will not have to familiarize themselves with the particulars when the time comes to review the proposed renovation plans.  Potential costs should be discussed so shareholders can be informed early in the process of the potential range of costs for the engineer/architect to review their plans.
        • Insurance professional: insurance coverage is becoming an increasingly complicated subject matter to navigate. Call the coop’s insurance agent and discuss with them appropriate levels and types of insurance that shareholders must be required to provide in order to undertake the alteration and to not adversely impact the co-ops existing insurance.
        • Cooperative’s Attorney: Ask your coop’s attorney to review and or prepare an alteration agreement which should be tailored to address the coop’s needs. The alteration agreement is absolutely essential for cooperative renovations. It is instrumental for protecting the integrity and safety of the building and protecting the quality of life of the other residents while the alteration is ongoing.  Make sure appropriate documents are prepared which require subsequent purchasers to be responsible for repairs taken by their predecessor shareholder.

You can read more about this matter in Part 2 of this blog series.

Written by Ruta Behrend