Lessons from Surfside
The Surfside tragedy of June 24, 2021, has provided a dire warning to condominium and cooperative board members everywhere not to neglect their responsibilities to preserve and protect the buildings that they manage and the health and safety of their occupants. Lawsuits have already been filed against Champlain Towers South Condominium Association Inc. and its managers. The condominium’s architects, engineers, and local government may also be litigation targets.
Board members are fiduciaries who are entrusted with the obligation to preserve and protect the value of the property that they manage. They are charged by state and local laws with the duty to maintain their buildings in good repair. These obligations are designed to protect the building residents and guard against dangers to their health and safety.
Traditionally, a board member is charged with the responsibility to act as a reasonably prudent person would act in similar circumstances. A deviation from this standard is the basis for a negligence claim. Board members are permitted to rely upon the advice of experts, such as engineers and architects. They may not put their heads in the sand and ignore problems brought to their attention by their building residents or by the professionals that they retain.
A board member that has notice of a building defect that could result in injury to residents or people who come near their building must take steps to examine the problem and implement repairs, so their building does not further deteriorate and expose residents and others to harm. In New York City, we are familiar with Local Law 11, its requirement to examine a building’s exterior on regular five-year cycles and to correct any conditions that are or could become dangerous. Interior defects must also be corrected pursuant to the New York State Multiple Dwelling Law, the New York City’s Housing Maintenance Code, and similar laws in other jurisdictions.
Condominium board members may be required to obtain Unit Owner consent for major expenditures or borrowing needed to obtain funds to perform repairs. The condominium by-laws should be carefully reviewed to determine if there is an exception to the requirement to obtain such consent when an emergency exists. As we have seen from Surfside, pushback from residents should not deter a condominium board from implementing emergency repairs.
Finally, Surfside has also shown that board members must review their organization’s insurance coverage regularly to make certain that their building is fully insured to enable building restoration or adequate compensation to be made to owners should a building be damaged beyond repair. Board members who fail to obtain insurance coverage in amounts required by condominium by-laws or reasonably sufficient to permit building restoration subject themselves to claims for the shortfall in insurance coverage that should have been obtained. They should review their directors’ and officers’ insurance coverage to be certain that their defense costs and potential liability are covered by insurance. Also, they may wish to review with counsel the best ways to protect their personal assets from creditor claims.
If you are a board member concerned about your responsibilities or protection against liability, please contact your counsel. We are available to assist if needed.