Dennis Greenstein Quoted in The Cooperator
"Renovation Fee Woes"

Dennis Greenstein was quoted in the Question & Answers section in the June 2007 issue of The Cooperator. The letter writer wrote that he lives in a Manhattan co-op and was planning to renovate his bathroom. His question was threefold: (1) Is it typical that a fee is imposed by the managing agent to file an application for the renovation, and if so, is the $500 his managing agent is charging standard; (2) Is a $6,000 security deposit for potential damages resulting from the planned renovation a typical amount and (3) Is it lawful and/or a conflict of interest for a non-owner managing agent who owns unsold shares to sit on the corporation’s board of directors?

Dennis responded that, "Generally, proprietary leases provide that alterations are subject to the approval of the board of directors…. Typically common, most buildings have an alteration policy established by the board which includes a requirement to have a shareholder sign an alteration agreement. The alteration agreement provides for, among other things, insurance coverage to be purchased, and maintained by the shareholder during the period of the alteration, the workdays and hours, and indemnity, and payment of an administrative fee and security deposit. While the writer may feel that the work being performed does not warrant the payment of such security deposit, it is typically part of the general procedure and policy of the board. Further, the managing agent generally receives a fee for processing the alteration application and papers."

With respect to the letter writer’s question concerning the security deposit for any potential damages resulting from his proposed renovation, Dennis said that, "Board members have a fiduciary obligation to protect the building and its residents from any damages and claims…. The board is required to respond to all alteration applications in a uniform manner, and to take such steps and policies it deems necessary and appropriate.…."

In response to the letter writer’s last question, Dennis noted that, "While wearing three hats may more likely lead to a conflict, sitting on the board, managing the property and owning unsold shares in and of itself is not a conflict…. The discussions and decisions regarding the management of the property and the unsold shares may require the managing agent/director to recuse him or herself from such discussions and decisions…."