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When a Co-op Neighbor Breaks the Law

April 25, 2015

By Ronda Kaysen

A Shareholder Commits a Crime

We recently learned that one of our shareholders pleaded guilty last year to defrauding the government of more than $165,000 in a 9/11 scheme. It’s particularly ugly to many of us because of what he took when others lost so much. Do we have any grounds to get this guy out of the co-op?

Hastings-on-Hudson, New York

Your neighbor might have committed a crime, but that fact alone does not make him a bad neighbor, nor does it mean he should lose his home. Although co-ops reserve the right to evict residents under certain circumstances, this is not one of them.

“Conduct not related to the building or home, no matter how horrible the person’s conduct outside the home, would not be grounds for an eviction,” said Adam Leitman Bailey, a Manhattan real estate lawyer.

The time to consider a person’s criminal history is when he submits an application to buy an apartment in a building. Co-ops often conduct background checks on prospective buyers and can (and probably do) reject applicants with criminal records, according to a Manhattan real estate lawyer. But current shareholders can be evicted only for doing something that harmed either the building or its residents. In this case, he defrauded the government, not the co-op.

Attempting to banish your neighbor also sets a dangerous precedent: What should the board do if someone is convicted of, say, drunken driving? I cannot imagine the co-op board would want to spend its time policing the private lives of its residents, and I doubt residents would appreciate living in such a community. “Just because somebody broke the law doesn’t mean they’re a bad property owner,” said Michael Sweig, a lobbyist for people with criminal backgrounds who was once convicted of a felony. “How many people in that co-op cheat on their taxes? Cheat on their wife? Don’t pay overtime to their employees? It’s a real glass house kind of thing.”

A Piece of a Hallway Purchased

I am a shareholder in a large co-op building. Recently a neighbor combined two apartments and bought a piece of the hallway. One of the hallway walls was the outside wall of part of my apartment. Now instead of hallway I have an apartment foyer on the other side of my apartment. I can hear footsteps and other noise. I was never told this would take place or consulted in any way. This compromises my living space and may affect the future sale of my apartment. How can this be legal?

Upper East Side, Manhattan

Many co-op and condominium boards view utility closets, stairwell landings and hallways as potential cash cows. Selling off a sliver of common space is seen as a painless way to keep maintenance costs down for everyone. The co-op enjoys a windfall when it sells the space and can collect a larger maintenance bill from the buyer. In many cases, the board is not required to pay taxes on the funds it receives for the sale of the shares, either. “This can be a particularly good deal for the co-op,” said Douglas P. Heller, a Manhattan real estate lawyer.

The board does not need to get shareholder approval for such a transaction. Even though you live next door and are directly affected by the decision, the board does not need to consult you, according to Leonard H. Ritz, a Manhattan real estate lawyer.

The board cannot make decisions that treat shareholders unequally, but because the board probably did not intend for this arrangement to disturb you, you would have a hard time arguing that it treated you unfairly. It would also be difficult to prove that the noises from a private foyer are substantially worse than those commonly heard in a residential hallway. After all, footsteps and voices are not uncommon hallway sounds.

Since the noise is bothering you, see if you can find a way to reduce it. Reach out to the co-op and your neighbor. Point out that the new arrangement has created a problem that wasn’t there before. Perhaps you could persuade them to install soundproofing measures — if the noise is also traveling from your apartment to your neighbor’s, he or she might be willing to work out an accommodation.

Condo Conversion and Renters

We learned last week that our rent-stabilized apartment is starting the process of a condo conversion. (We received the red herring in the mail.) What is your advice on next steps? What is the timeline? What should we expect?

Washington Heights, Manhattan

Brace yourself for a noisy future. Condo conversions are notoriously messy affairs for renters, as buildings frequently undergo substantial renovations to both individual units and common areas to attract buyers. Although enviable insider deals are a thing of the past, tenants are still usually offered the exclusive right to buy their unit, just not at a steep discount.

The initial offering plan you received, known as a red herring because of the red lettering on the front cover, is an early step in a long, complex process. You and your neighbors have several months to review the documents and supporting materials, according to Andrew C. Jorges, a Manhattan real estate lawyer.

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