There are two major aspects to any renovation project in a co-op–one is getting approval from the co-op board, the other is getting approval from the Building Department. Getting only one approval is not enough. In other words, just because the Building Department approves the work you want to do, it does not mean it will be acceptable to the co-op’s board of directors. By the same token, just because a co-op board approves a renovation, it does not mean you can avoid obtaining approval from the Building Department. You can open yourself up to a lot of hassles if you don’t go through the necessary channels to obtain approval. Apartment alteration "war stories" exemplify the need for utilizing proper renovation procedures. Some of the accounts from the front line will make you think twice before taking any shortcuts.

What these examples illustrate is that renovation in a co-op or condo are very complicated and involve many issues. What you should take with you are two renovation precepts: Obtain the requisite permission for any undertaking and you can never have enough insurance. You must make certain that when you want to renovate, you go through the proper procedures to obtain approval and that you do not exceed the permission granted. You certainly should never begin a renovation project without insurance–even if your board does not require you to purchase it.

One story from my war chest involves the renovation of a penthouse apartment. The owners were spending a great deal of money on the renovation and had gotten both Building Department and co-op board approval. They even had an architect who met with the board. The only problem was that the owners unilaterally decided to make a slight change in the work that had been approved. Instead of installing French windows, which were on the approved plans, they had decided to install French doors.

The few extra inches involved with the change incensed the board and they threatened to sue the shareholders if they did not restore the premises. The board was upset about the extra space being taken and about the precedent set by such behavior.

We entered into weeks of discussions. Obviously, the renovator (my client) did not have much of a defense if litigation had been started. In order to ward off litigation, we entered into a settlement agreement in which my client was allowed to leave the work as is, but agreed to be responsible for maintaining it. The unit’s roof and exterior brick was maintained by the building and this work arguably compromised the waterproofing. It will be interesting to see what happens when the shareholder tries to sell the unit years from now.

Most people think that if there is a general liability insurance policy, it will cover any problems that may arise. Not true. It is imperative that you have adequate insurance–consult with a professional to see how much insurance is enough–in case a situation arises.

A unit owner in a condominium building was trying to fix a radiator. A pipe burst, burned the handyman and flooded the unit and those below. Firemen had to chop a hole in the floor to let some of the water out. My client is the one whose floor was chopped. She only had a small insurance policy and assumed the building’s policy should pay her for the extensive damage. The building’s general liability carrier denied responsibility and claimed that at least part of the damage was due to my client’s renovation work, which, they, said, was done without the board’s permission. While my client did not believe the argument had any merit, it caused the case to drag one. Ultimately it was mediated and settled. It is fairly obvious that renovation issues can arise in unexpected ways!

It is also fairly common for renovation work to damage a neighbor’s apartment. This can include extensive plaster dust that requires expensive curtains to be cleaned. It can also include a workman smoking a cigarette and not fully extinguishing it, that later burst into flames causing massive damage to neighboring apartments. The neighboring apartment owners did not have insurance, but the building did. In such cases, since so much money is at risk, the insurance company for the building is not likely to just write a check. There will be complicated issues as to who the liable parties are; every possible party will be brought into such a lawsuit. If there is extensive fire damage, there will be an adjuster for both sides examining the value of the items, especially if any artwork was damaged or destroyed.

Another condo owner was in the process of totally renovating her apartment. During a heavy rainstorm, water flowed into the apartment like a river. It came from the terrace and flowed down the internal staircase. The entry door to the apartment had a low saddle that did not block the flow of the water. A commercial space on the ground floor was also damaged. Neither party had insurance. The unit owner blamed the contractor. The contractor blamed the building owner. The building owner blamed his architect and the contractor. The contractor’s insurance carrier denied coverage and the unit owner wound up firing the contractor. The damage from this will be on the list of claims against him when a lawsuit is started.

If the unit owner had an insurance policy, at least those losses would have been reimbursed and the project could have continued. The insurance company would have sought reimbursement from the other parties’ carriers. This particular unit owner is not from the United States and was upset that no one had told her she was well-advised to have insurance.

There are a host of tricky situations that can arise involving alterations even before an apartment is purchased. A prospective buyer may be looking at a unit with roof rights. He says to the seller, "I would like to buy this apartment but only if I can build a staircase leading up to the roof and a room on the roof." In other words, the buyer wants to make the board’s approval of the renovation a condition of the contract going to closing. This is a very unusual request because the buyer is not yet a shareholder. The buyer may not even have his mortgage application approved, yet he is asking the board to approve this work.

Many boards will flat-out refuse to agree to consider this before closing. However, small buildings with fewer apartments may entertain such an application. The risk to the seller is that if the board takes a long time to consider the request, the apartment will be off the market and the request may be denied.

There are other scenarios where the building does not have a well-organized board and a prospective buyer makes a pre-closing request to renovate. The co-op may have just an active president who says the renovation is okay. Later, the board changes or someone questions his authority to approve the renovation. A lawsuit resulted in just such a situation.

Since it has become easier to join apartments, I have seen more requests for renovation where the shareholder wants to "buy" some of the co-op’s hallway to included in the joined apartments. This involves valuing the space and issuing stock for it. It may involve a No-Action Letter from the Attorney General’s office. It is a complicated process. Naturally, any co-op willing to approve such work would require the shareholder to absorb all of the related expenses, including the architect or engineer who would advise the building.

Boards must have stringent requirements that they enforce. If problems ensure, it is important to seek legal counsel specifically knowledgeable in this area. While your renovation may not be hassle-free, it is possible to steer clear of similar disasters.