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August 2019

Developing Health and Safety Programs

Developing Health and Safety Programs 1202 736 Matthew Adam Properties

By Ira Meister
President and CEO – Matthew Adam Properties, Inc.

Recently, an elderly resident of an Upper East Side co-op became ill and contacted the doorman who called 911.

His efforts didn’t end there.  He then was able to give the responding EMS technicians details of the woman’s pre-existing conditions and medications. The doorman also contacted the woman’s family and physician.

How was he able to do this?  All the information was on file at the building as part of Matthew Adam Properties’ “Voluntary Life Saving Program.”  We instituted this program several years ago as part of our overall Emergency Response Plan.

As the name states, the program is completely voluntary and ensures privacy of information.  The resident is asked to complete a questionnaire asking for the requisite information.  Only the phone number and email address of the resident are put into a computer. The rest of the information is kept off system in a sealed book that only the superintendent has access to. In this way, we have the relevant information without fearing someone will hack in or by error having the information get on the internet.  Having phone numbers and emails available is important in the event we need to quickly notify residents of an emergency or dangerous situation.

The voluntary program is just one of several life-saving, safety and health initiatives we instituted in properties we manage as part of our comprehensive effort to provide for the health and safety of residents of our buildings.  In addition, our procedures help protect the environment, maintain an emergency alert and life-saving system and increase stairway lighting during an emergency.  We customize plans for buildings based on prior experiences and revise them as necessary.

Our overall plan encompasses many programs, such as:
  • Our company includes an EMT who advises and guides us in implementing these programs.As far as we know, we are the only management firm with this expertise and programs.
  • We maintain a logbook onsite detailing what to do on behalf of seniors, children or even pets on occasion in the event of an emergency. For example, some residents have dialysis or chemotherapy treatments at home. A power failure could be life-threatening. If they provide us with this information, we check in during a power outage and if necessary call 911 to have them taken from the building.
  • Several of our properties have purchased defibrillators that are kept in the building’s office.  The staff is trained and retrained in their use to try to stabilize the patient until emergency services respond.  Minutes are vital when someone experiences a heart incident.

We are environmentally conscious and have established our company as a leader in promoting and using green cleaning products in the properties we manage. An important feature of our safety and health initiatives is our “Green Management Program.” The benefits are many. Our use of green, non-toxic products, which have the coveted “Green Seal,” provides for a cleaner world and healthier environment for both residents and staff. To reduce costs, we purchase our supplies in concentrate from a New York City company that specializes in green products and with our bulk buying power actually save money for our buildings. We conduct ongoing training sessions for managers and building staffs to keep them current on the latest products and their use.

Properties managed by Matthew Adam Properties follow the strict requirements for maintenance and operations of green properties established by the LEED certified program, the international standard for green compliance. In addition, we are in full compliance with the mandated safety plans required of all hi-rise residential buildings and in many cases, have gone beyond what is required.

We are dedicated to having the finest health and safety initiatives in the industry and are continuously looking for new programs we can implement.

Managing Co-ops and Condos Strategically

Managing Co-ops and Condos Strategically 1990 1152 Matthew Adam Properties

Published in MANN REPORT

By
Ira Meister,
President and CEO,
Matthew Adam Properties, Inc

The foundation of Matthew Adam Properties management efforts is a philosophy and practice we call Strategic Management.

It is a disciplined approach to property management and one that has proven very successful over the years.  I believe it would be helpful to boards of both condos and co-ops to learn about strategic management and see if they can adopt elements for their properties.

In its basic form, Strategic Management is adapting sound business principles to property management, which is fairly straightforward as most condo and co-op corporations are multi-million businesses. Yet, all too often this is overlooked and emotion and lack of discipline become the guiding forces in the operation of a property.

Our goal with Strategic Management is to listen to the policy preferences of the board and maintain discipline as we implement them with excellent management and innovative thinking.

How does Strategic Management work?

When we are retained, we immediately evaluate a property to identify its strengths and weaknesses.  We then create a customized Strategic Management Program that includes financial issues, service, contracts, maintenance, repairs and long-term capital improvements.

Periodically, a board and our Asset Manager review the target objectives and evaluate our success in meeting them. This reduces unwanted surprises and takes into account short and long-term requirements. It is a planned approach rather than the usual Band-Aid cure. When objectives are not met, we analyze the situation and develop alternative methods.

Since we initiated Strategic Management more than two decades ago, there have been significant changes in managing properties. The most significant has been the evolution of technology, which effects so much of what we do today. Strategic Management has allowed us to seamlessly adapt and utilize technology as it gives us a platform to integrate it into our overall systems.

Another change has been the emphasis not only on managing a property effectively, but increasing the value of the property and the individual units.  Strategic Management plays a role in this as it provides premium management and services, which are essential.  But it goes further.  It is an indication to prospective buyers that the building is being managed efficiently and like a business.  The financial records we maintain are up-to-date and accurately reflect the financial condition of a property.

Successful corporations continuously seek ways to innovatively improve their product.

For us, it means seeking improvements to provide additional amenities and services for residents.  I’m proud that Matthew Adam Properties was a leader in creating unused space as a playroom for children. We did this more than a decade ago at York River House on Manhattan’s East Side using in-house staff to reduce costs. Our work was featured in the Real Estate section of the Sunday New York Times.

Speaking of innovation, as part of Matthew Adam Properties’ Green Management Program, we are installing water recovery systems in participating properties. The run-off water is saved and used to water plants and trees. Not only does this contribute to saving water but it also has the economic impact of reducing the city’s continuously escalating water tax, which is now based on usage rather than frontage. In its more sophisticated application, the water can be recycled for use in toilets and HVAC systems.

Our participation in the “Green Revolution” is a natural outgrowth of our Strategic Management Program in seeking innovative ways to maximize resources and provide efficient and effective means to manage a property.

For example, a geothermal well was installed in a multi-family condominium of East 93rdStreet — one of the few in Manhattan. It is estimated that geothermal systems are 75 percent more efficient than oil furnaces and 48 more efficient than natural gas, with costs recovered in as little as two to eight years.

Our Green initiatives also include improving lighting in public areas. In fact, we helped design new fixtures to improve efficiency. Successful businesses provide a healthy and safe work environment.  We encourage the use of non-toxic cleaning products which are less expensive and more effective.

Strategic Management initially provided a path to improving management services.  It has evolved over the years to a plan that allows us to adapt to changing times and provide innovative and value-added services for condos and co-ops.

A Healthy Reserve Fund, a Healthy Building

A Healthy Reserve Fund, a Healthy Building 2112 1228 Matthew Adam Properties

By Ira Meister
President and CEO – Matthew Adam Properties, Inc.

Here is a tale of two buildings when the boiler breaks down.

Building one has a low reserve fund that is tied up in non-liquid assets such as mid and long-term CDs.  Building two has a solid reserve fund with the some of the assets in liquid investments.

Building One will have to scrounge around to get funds to pay for the new boiler, such as a special assessment on the apartment owners or using funds from operations until the money can be recouped from a special assessment or some non-liquid assets are available.

Building Two has sufficient funds that are available immediately for the repairs without the need for a special assessment or loan.

What is the reserve fund?

It is money set aside for repairs and improvements to the building, often referred to as capital projects. It should be kept separate from the annual operating funds which provide for the daily operations of the building and determine the amount of the monthly charges to residents.  Buildings that lack a sufficient reserve fund or misuse it to pay for operating expenses can find themselves in a bind when a major repair or improvement project is needed.

It is important to have a sufficient reserve fund as some lenders look at that when considering a mortgage for buyers. Purchasers with solid financials have been refused a mortgage because the building lacked adequate reserves. This was particularly true after the Great Recession of 2008.  A solid reserve fund also broadcasts that the building is well run which helps increase the value of the units. It also permits the board to make improvements to enhance the quality of life for residents.

The amount of the reserve fund depends on several factors including the age and condition of the building.  Newer buildings would most likely need less investment for repairs than older ones.  The recognized way to determine the size of the reserve fund is to prepare a capital budget plan.  This plan usually covers five years.  It is recommended that a professional engineer or architect inspect the building and determine the life span of the various systems and the cost to repair them. Included should be the roof, exterior, elevators, boilers and balconies.  The engineer can then determine the expected cost for the repairs as a guide to funding the reserve fund.  The capital plan should be updated annually to consider any work that has been done and changes in the condition of the buildings systems as well as costs and the balance in the reserve funds.

The next issue is funding the reserve fund.

Various options exist including a special assessment. Another possibility for co-ops, which was used by many buildings as interest rates plummeted to historic lows in recent years, is to refinance the underlying mortgage and direct the freed-up money to the reserve fund.  Some buildings that impose a transfer fee or fee for sublets direct these funds for capital and improvement projects.  Other buildings use a small percentage of the monthly charges to replenish the reserve fund. Whichever method or combination a building chooses, it must stick to its plan and not follow the temptation to use these funds for operating expenses as a way to keep a lid on monthly charges.

The second key component for the reserve fund is investing the money. Many properties work with a financial adviser, but they should follow some basic principles in their investment philosophy.  Most important is being conservative and while it would be wonderful to have significant asset appreciation that approach can often lead to significant losses. The money should be kept in conservative investments even in this period of low interest rates. Boards could look to U.S. or municipal bonds, CDs, or money market funds.  Equally important is having some of the funds in liquid investments so the board can access them quickly when needed.  One approach is to have ladder of investments so funds mature on a regular basis.

With prudent planning and wise investment decisions, co-ops and condos can have the funds available when needed without putting the squeeze on residents.

A Cure for the Hallway Headache

A Cure for the Hallway Headache 1246 742 Matthew Adam Properties

By Ira Meister
President and CEO – Matthew Adam Properties, Inc.

Much has been written over the years about the responsibilities and duties of property managers.

Often overlooked aspects of the job are relations with residents, communications and promoting a sense of community as multi-family buildings are, in effect, small communities. Often, there are conflicts in priorities caused by differing views of various groups, whether aligned by age, life-style or income.

Our goal is to work with the groups and seek a consensus on the best way to address issues and do the best to provide an excellent quality of life for residents and enhance the property’s value.

Over the years, Matthew Adam Properties has gained a reputation for innovative approaches to various issues as well as providing quality management.

We were one of the first to add amenities such as a play area for children and to create a program to provide a healthier environment for residents and workers with the use of “green” no-toxic materials.

Recently, we developed a new procedure for working with residents and the board of directors to design a needed upgrade of a co-op’s public space.

The board and shareholders of an Upper East Side co-op decided it was time to redo the public hallways which had become tired over the years. Initially, working with the board, we followed the usual path of bidding out the project and hiring an interior designer to create the plans. The board would show the design to the owners for their approval. Usually, this would result in numerous suggestions and objections from the shareholders resulting in minor changes.

We wanted to find a better way.

As usually happens, the proposed design initially met with numerous objections. So, we formulated this a new approach to include shareholders in the design process.  Working with the board, we came up with what I think is a much better idea. It could set a precedent for the way buildings work on similar projects in the future.

Updating public areas is important for older buildings in Manhattan. From experience, we know the appearance of a property adds more value than adding amenities such as a health facility.  The aesthetics of a building is what prospective buyers and visitors see immediately and an attractive lobby and hallways create a definite, and if done well, a positive impression.  No one wants to live in a building with dreary, dark hallways, thread-bare carpeting and grimy wallpaper.

Rather than having the decisions made behind closed doors and then presented in a take all or nothing decision, we sought input from the residents.  In doing so, we helped create a greater sense of community in the building and eventually just about everyone bought into the design.

To start, we created comment sheets and distributed them to shareholders asking for their ideas and what they would like based on their experiences and personal preferences.  We received about 70 responses from the shareholders with some terrific ideas that had not be included in the original plans.

Suggestions included using two types of wallpaper, having wood trim on the apartment doors, accenting the columns, accenting the elevator area and having inset carpeting in the heavily trafficked area in front of the elevator so the carpeting could be easily changed when worn.

Many of the ideas were incorporated into our plans.

We then asked the designer to draw up three concepts incorporating ideas suggested by the residents. The plans were put on boards that the residents could review and discuss.  We then distributed another set of forms and ballots asking for comments on the plans and which one they preferred and why. These sheets were coded so there would be no ballot-stuffing. The designer then worked on the favored plan incorporating comments so that a coherent final plan was presented and approved.

This process resulted in a better design than originally planned and pleased just about everyone because they had input and felt to be part of the process. There was minimal additional cost but it was well worth it. We not only have lovely public spaces the residents are proud of, but we also have a greater sense of community.

More Signage Required for Buildings

More Signage Required for Buildings 1024 768 Matthew Adam Properties

By Ira Meister
President and CEO – Matthew Adam Properties, Inc.

New York City has increased the amount of signage required in multi-family buildings.

With these latest requirements, elevators and common areas may soon look like college bulletin boards filled with students’ postings seeking rides home.

The new requirements include additional signage on procedures to follow in the event of a gas leak, warnings to residents of a possible flooding situation or natural disaster such as occurred during Superstorm Sandy and new Fire Department rules for the location of apartment numbers.

Local Law 153 of 2016 detailing gas leak procedures is an outgrowth of the explosion in March 2015 in a residential/commercial building in the East Village that killed two. The cause of the explosion was an illegal gas-line hook-up.  Another incident involved a gas main in Harlem several years ago that halted traffic on Metro North.  According to press reports, the average age of a gas main in New York City is 56 years.

The new law requires buildings to post signage telling residents and potential tenants what to do in the event of a gas leak.  While the precise wording still has not been release, buildings are required to post a written announcement until the wording is finalized. The signage should instruct the resident to quickly open nearby doors and windows and leave the building immediately and not attempt to locate the leak. Residents should not turn on or off any electrical appliances, light matches or lighters, nor use a house-phone or cell-phone. Once outside, they should to first call 911, and then the gas service provider. The name and the emergency number of the gas service provider should be posted on the notice.  Failure to post the notice is subject to a violation. A copy should be given to all residents and tenants as well as when leases are renewed and new residents move in.

While the focus usually is on leaks in gas mains and lines, some leaks occur in home appliances. It is important that a resident making changing or repairing appliances have the work done by a licensed professional.

We are now in the hurricane system, or as it is called in New York Housing Preservation and Development (HPD) terminology, the Coastal Storm Season for New York City.  During this season, buildings are required to post signage in the event of a coastal storm or similar emergency.  Multi-family buildings where at least unit one is not occupied by the owner are required to post a temporary notice with emergency information in the common area. This notice is to be posted prior to the weather emergency, after a natural disaster or after being informed there will be a utility outage lasting more than 24 hours.  It should include whether the building is in an emergency evacuation zone and if an outage what services are unavailable.

Additional signage is required in flood zones, which can be identified by contacting HPD.

The Fire Department recently instituted rules that require multi-family buildings to place reflective signs on all apartment doors to assist firefighters in identifying the apartment number when conditions make it difficult to see the current set-up.  The law went into effect on March 30 for duplexes and triplexes and will be effective by March 30, 2018 for single-level apartments.

In many fires, smoke and heat force firefighters to crawl though the hallways where they can’t see the apartment number.  The new law is designed to help the firefighters identify apartments even in heavy smoke conditions.

There are specific standards for the apartment number signs.  The new ones must be placed on the door jamb where the hinges are and be no higher than 12 inches from the floor.

The signs must indicate whether the apartment has more than one floor and if there is more than one entrance and identify the primary entrance.

A similarly positioned sign must be placed at stairwells reading “Exit” and signs indicating the direction of apartments must be placed on the hallway walls opposite the stairwells.

Only certain types of materials are permitted including photo-luminescent materials that glow in the dark and other highly reflective materials.

An issue in some buildings is whether the signs would integrate with the color décor in the hallways. The law gives the buildings latitude in this as long as the reflective numbers and information meet requirements.

The local law also requires building staffs to keep a log and annually inspect to see if all signs are intact. The Fire Department can request the logs during an inspection.

Uncovering Hidden Revenues and Reducing Expenses

Uncovering Hidden Revenues and Reducing Expenses 1320 702 Matthew Adam Properties

By Ira Meister
President and CEO – Matthew Adam Properties, Inc.

An annual budget for a co-op or condominium is a lot like an iceberg.

Only the tip of the iceberg can be seen, the bulk of it hidden below the sea. The bulk of a budget, while not exactly hidden, are mandated or essential costs and include salaries, real estate taxes and mortgage (for co-ops) and fuel.  The exact percentage depends on the building.

This heavy load makes it difficult to minimize budget increases and requires tough decisions by boards and property managers.  In effect, boards and managing agents have less leeway in determining a budget than many realize.  Yet, there are areas where with diligent management revenues can be increased and costs can be reduced.  The budget season for most co-ops and condos is past so as the fiscal year begins it is a good time to explore ways to increase revenues and reduce costs for the next budget.

On the revenue side, many buildings have storage and laundry rooms. These contracts should be reviewed periodically with the vendors to see where revenues for the building can be increased.  A review may also disclose areas where the building is not getting all the income it should.  Similarly, any commercial lease should be analyzed to ascertain if the building is collecting all the income it is entitled to.  Are there charge-backs for capital work that were never processed?  It is surprising what can be found in a thorough review of all contracts, not only for the coming fiscal year but into the future.

Another possible income source is cellular towers on the roof.  Boards should also review potential revenue sources such as the so-called “Flip Tax” when units are sold, if the property doesn’t have one.

On the expense side, one good area to explore is energy.  Matthew Adam Properties is a leader in installing LED lighting in public areas which lowers energy costs. LED bulbs also last longer and require less maintenance.

Many of the properties we manage have converted to natural gas from oil. The cost of natural gas is usually lower and can be bought for less from Energy Supply Companies (ESCOs) rather than utilities. ESCOs provide the natural gas, which is distributed either through the Con Edison grid system in Manhattan and the Bronx or other companies in Queens, Brooklyn and Staten Island. With more competition in the marketplace and the increase in ESCOs, it is worthwhile to seek out a good rate and lock it in; summer is usually the best time to get the lowest prices. There are several advantages. The co-op or condo will have a good fix on energy expenses for the upcoming season and can avoid sharp increases. Many unpredictable factors can abruptly affect prices, such as international situations, weather and the commodities market.

Using natural gas and ESCOs can produce considerable savings.  Matthew Adam Properties is not in the energy business, so any savings accrued goes directly to the co-op or condo.

We have installed water heaters for use in the summer months when the boilers are not needed to provide heat.  Using the water heaters, rather than the boilers, saves considerable energy. We also work with different vendors to analyze energy usage and have installed variable controls that can sense the demand for energy and control output to fit demand and provide what is needed.

We are installing tamper-proof heat-control monitors in apartments which provide data to keep apartments from overheating but remaining at a comfortable temperature. Overheating wastes energy. Some of our properties have controls that monitor the need and demand for the HVAC system pumps that operate air conditioning.

Not all buildings can convert to gas.

Some older buildings still use steam heat.  In these buildings, we look to replace the steam traps and make certain the pipes and boilers are properly wrapped so heat is not lost entering building or when the boiler is operating. In fact, we check the insulation on all boilers.

Another area we monitor closely is water use.  By tracking use against historic data, we can determine if water is being lost through leaks. As the city now charges for usage rather than the old system based on frontage, leaks can drain from the budget.

With boards and property managers trying to keep monthly charges as low as possible, it is important that in addition to the major expenses, they look at the tip of the iceberg (budget) to see where additional revenues and savings can be found.

Security in Hi-Rise Buildings

Security in Hi-Rise Buildings 938 538 Matthew Adam Properties

By Ira Meister
President and CEO – Matthew Adam Properties, Inc.

Years ago, when someone visited a friend or relative in many New York apartment buildings and were too impatient to wait for a response, they would push all the buzzer buttons in the vestibule. There was no voice intercom or video and people had less fear of strangers.

Fast forward to today and what it takes to get into high-rise buildings. In many, there are doormen who, depending on the building and its regulations, ask for the guest to sign in and then call up to be certain they are expected.  In addition, many buildings have acquired more sophisticated technology to increase security.

Security has been a concern in residential buildings for a long time. It increased dramatically after 9/11 as managers, boards and insurance companies realized more could be done and residents demanded an increased sense of safety. Spurred by the attacks on the World Trade Center and advances in technology, a new industry of residential security was born.

Prior to 9/11, much of the security in many properties involved the old closed circuit TVs with their time-lapse, grainy pictures that someone had to monitor and were more useful in trying to identify unwanted visitors after they had left than being useful in stopping an intrusion.  Some buildings required building staff to accompany a delivery person to an apartment or have the resident come down.

Now, new high-definition cameras provide increased photo clarity, hard drives have more capacity, motion-sensors that can eliminate viewing in dead times and longer recording times. With some systems the images can be downloaded to a smart phone so superintendents on their rounds can view the cameras when alerted to someone entering an unmanned door.

Almost all high-rise co-ops, condos and luxury rentals, have full-time doormen and even concierges.  Increasingly, buildings are adding computerized systems that keep track of all visitors, and provide information on who is allowed into the apartment when the resident is out such as housekeepers, contractors or relatives.

In addition, many buildings have added package/messenger rooms where a delivery is left and then taken up by staff or picked up by the resident, who can be alerted that the package has arrived.

Buildings without doorman, such as one we manage on lower Broadway, have advanced camera and voice intercom systems.  Built in 1915, the co-op, has 44 loft units on eight floors. To upgrade the system, we had to retrofit the building to handle the advanced technology.

Some buildings have installed an electronic offsite doorman that uses the internet for video security, electronic access control and alarm monitoring.

Although set up like a video intercom, the system is staffed by real people who monitor the door remotely. If at home, the resident can see who the visitor is and choose whether to let them in.  If the resident is not home, a live person speaks to the visitor.  If the visitor is authorized to enter the apartment or is a delivery man leaving a package, they can be let in.  If not approved, they are denied entry. The system’s cameras can follow a person while in the public areas of the building.

A more recent high-tech approach uses facial recognition software. The system unlocks the door for residents and approved visitors by identifying their faces. If the resident is not at home, they can be notified of visitors who can be let in by the resident using their mobile phone. (A similar system works by identifying the iris of one’s eyes.)

Some properties we manage have begun using key fobs which provide access, security and a record of use.  The fob permits entry to the building, can activate the elevator and if programmed can designate the specific floor, plus provide access to the apartment.  The system maintains a record of whose key fob is used and the time. If, for example, a housekeeper or nanny, who has a fob, enters the building or apartment at a time when they are not authorized, there will be a record of it.

Doormen would seem to be the preferred route for security in a building, but some residents prefer buildings without them for both financial and privacy reasons.  For example, they don’t want a doorman to know when they come and go, what deliveries they get or who visits them.  Additionally, some residents dislike the increased use of cameras and other technologies for the same reasons.

We are cognizant of the various preferences of residents, but, above all, our goal is to make the buildings and their homes as safe as possible.

The Importance of the Proprietary Lease

The Importance of the Proprietary Lease 2106 1284 Matthew Adam Properties

By Ira Meister
President and CEO – Matthew Adam Properties, Inc.

In the frantic rush to purchase their dream home, co-op buyers often fail to review carefully the building’s proprietary lease. This can lead to problems down the road.

For instance, does the co-op’s proprietary lease permit a buyer who is a consultant to use a second bedroom in the apartment as an office? Maybe. Some buildings allow business uses if it does not involve significant traffic.  Non-permitted uses could include a daycare center or a psychiatrist’s office.  Other buildings restrict all businesses, even those of a self-employed graphic designer or a writer.

The proprietary lease, required in all co-ops, in effect establishes a landlord-tenant relationship between the co-op corporation and the shareholder. It is important to remember that in a co-op the buyer is purchasing shares in the corporation and not actually buying the property as in a condominium, which does not have a proprietary lease, but has other documents. This article focuses on co-ops.

What is included in the proprietary lease?

The proprietary leasecovers maintenance and repair obligations along with such issues as permitted uses, subletting, alterations and transfers. For instance, what are the requirements for subletting an apartment?  Does the co-op permit it, does it require board approval and does the board need to approve the sub-tenant?

Without a well-crafted proprietary lease covering a myriad of regulations and circumstances, a co-op can find itself on the losing end of lawsuits with individual shareholders.  Some argue that the initial proprietary lease is often weak because it was drafted by the sponsor who wanted as few restrictions as possible. Whatever the reason, cases abound where a shareholder obtained judgement against the co-op because the proprietary lease did not contain, or was not sufficiently specific about, an issue.  This has included such basic matters as who is responsible for damage caused in the apartment from a leaking pipe in the walls or an upstairs apartment, the fee policy for sublets, evicting a shareholder or subtenant for excessive noise, and payment for an ancillary service, such as a storage bin.

Boards should review the proprietary lease to be certain it is up-to-date and includes protection for the co-op and its shareholders. With the advances in technology, the changing ways of doing business and increased government regulations, many proprietary leases are obsolete.  Additionally, financial institutions often will not provide financing for buildings whose proprietary lease expires in less than 35 years.  If the proprietary lease expires, the building ceases to be a co-op.

Items that should be included include shareholder repairs, who is responsible and for what; damage to the apartment from leaks from outside; terrace and roof damage; late fees; house rules, is there a mechanism to enforce them; who can live in the apartment; subletting, does the board limit sublets; transfer fees and a flip tax, there must be specific provision; alterations, do they require board approval; insurance, what type is the shareholder required to have; and access to the apartment if the shareholder refuses to provide a key to the building.

To ensure the proprietary lease contains wording that protects the co-op, and also individual shareholders, the board should ask its attorney to review the lease and propose changes.

If desired, a board committee can be formed to work with the attorney.  In recent years, there has been a proliferation of lawsuits involving a board and also between shareholders. The board should consider including a format for arbitration as a way to more quickly settle these disputes and at less cost.

Once the board has approved the changes, the amended lease goes to a vote of shareholders.  If the vote includes changing the term of the lease, a super-majority (which could range from 66 to 90 percent depending on the expiring lease) is required for approval.   Otherwise, it’s a simple majority. While it would seem that all shareholders would favor updating the lease, there often are objections to provisions regarding the flip tax, subletting policies, alterations and repairs.  For instance, if several shareholders are contemplating subletting, they would argue for the most lenient requirements, while a shareholder with a family might argue for the most stringent rules.

We advise the board and its advisers to maintain transparency and provide informational updates.  Having an opaque process and then handing the revised lease to shareholders demanding a positive vote can result in a negative reception and extended fight for approval.

The board should authorize periodic reviews of the proprietary lease so it stays current with recent court decisions and changing government regulations.

Preparing for Winter

Preparing for Winter 1092 632 Matthew Adam Properties

By Ira Meister
President and CEO – Matthew Adam Properties, Inc.

Most of us tend to think of winter as chillingly cold with frigid winds, snow-clogged streets and in recent years snow-caused delays in mass transit.

Not many think of the impact winter has on buildings.  Few, that is, except experienced property managers.  Our responsibility is to see that the buildings operate smoothly and efficiently during blustery and frigid December, January and February days and the possibility of damage is minimized to the structure, both the interior and exterior.

While our asset managers and building staffs are vigilant throughout the year to ensure all systems are operating properly and necessary repairs are made when problems arise, we pay special attention during the fall to make certain that we are prepared for the winter days.  There are numerous items on our checklist.

One essential matter is to bring in a professional boiler company while the heating systems are down during the summer.

The companies clean the boiler, inspect to see what repairs, if any, are required and then test the systems. Failure to do this can lead to a breakdown during a frigid day and increased expense, and dirt build-up in boilers can significantly reduce their efficiency adding to the gas or oil bill.  In recent years many of the properties we manage have converted to gas, which is a cleaner fuel and reduces both maintenance costs and the possibility of dirt build-up.  Fuel usage is monitored during the winter months to see if there is a non-weather related significant increase. This often is a sign of problems with the boiler or the delivery system and can be an early alert system to make repairs.

We also check insulation on pipes and the heating equipment to reduce the loss of heat and maintain maximum efficiency.

The basement is another vulnerable area in winter. Along with damage to frozen pipes and strain on the boiler, winter can cause havoc on brick and mortar. A small hole in the exterior can burst open from winter temperatures and wind, wasting energy and causing expensive damage. Building staffs inspect the basement for even minor damage to bricks and mortar.

Another important area we inspect is the roof.  We make certain all debris is removed and the drains are clear.  Often during cold spells, snow and ice freezes on the drains and when they thaw, the drains can’t handle the flow and it can seep into the roof or units and cause damage.  It’s similar to roads when potholes form after water seeps into a crevice and ice forms, expanding the hole. The ice then thaws and more water seeps in weakening the surface. This pattern can be repeated eventually causing leaks and causing leaks and weakening the structure.

Another high up area to check is terraces.  Residents should follow the same procedures to see whether drains are clogged and barriers need repair.

Many buildings have roof-top water tanks. These should be monitored. If any controls that operate the wood tanks and the piping aren’t properly insulated or protected, water can freeze within the tank.  Slight leaks on the tank can freeze and expand the wood leading to damage when the ice thaws.

If the building has window air conditioning units that stay in year-round, we work with the residents to be certain they are properly sealed during the winter to prevent draughts and the loss of heat. If the units are removed, we ask residents to notify building staff so we can check to see if there is damage to the casement which would also lead to draughts and loss of heat.

Exterior water lines exposed to the cold are shut down and drained to prevent the pipes bursting during extreme cold.

Units with working fireplaces need to have them professionally inspected and cleaned prior to the winter when they receive the most use.  The flew damper should be checked to be certain it is open and operating correctly to prevent a backdraft that can cause serious smoke damage to walls, furniture and paintings.

Winter preparation includes checking supplies so the building is prepared for a snow storm.  We want to have adequate sand and sidewalk ice melt to last through a heavy snow season and not have to scurry around to find more when it is needed.  We check to insure there is sufficient snow removal equipment.

From experience, we understand the importance of taking the steps discussed above, and others, to ensure that the residents of properties we manage have a warm and safe winter.

Check Your Homeowners’ Insurance Annually

Check Your Homeowners’ Insurance Annually 1524 1050 Matthew Adam Properties

By Ira Meister
President and CEO – Matthew Adam Properties, Inc.

Many residents of co-ops and condos as well as boards of the properties are unfamiliar with all the intricacies of homeowners’ insurance.

There are many misconceptions about what is covered and for how much. Boards, in particular, need to be aware of new types of coverage.

For residents, I am reminded of a recent discussion with Robert Owens, president of the insurance broker The Owens Group.  He told me about meeting a couple whose co-op suffered severe water damage from an overflowing bathtub in an upstairs apartment.  The family needed to move out of their home while repairs could be made. This is where their real problems began.

As Owens related the story, the couple lacked sufficient insurance to cover their out-of-pocket expenses, replace furniture and other items and to repair the damage.  The insufficient coverage combined with the house rules of their building created numerous problems.  Their policy did not cover the cost of staying in a hotel if the damages could be repaired fairly quickly, or the rent for an apartment if they faced an extended period as well as other expenses related to their temporary relocation. Some luxury buildings allow construction and extensive repairs only during a three or four-month period during the summer when many residents are away.

Many people, Owens pointed out, try to save on their premiums by underinsuring their personal property and improvements.  In addition, many fail to insure for replacement cost and rather than having the insurance cover the cost of replacing the items at current value, they get only the initial value less depreciation which, depending on the age of the item, can be a significant difference.

Others also assume that the party at fault will be responsible for the cost of the repairs.  This is not the case in many properties, especially those at the high-end. Many co-ops and condos have subrogation clauses preventing the injured party from suing the responsible neighbor for accidents such as flooding caused by a broken pipe or an overflowing bathtub.

So, what about suing the building. Not viable. The condo or co-op association is responsible for occurrences outside the walls of the apartment in the public areas. It is not responsible for damage in the units unless the building was a direct cause of the problems and that varies from building to building depending on the house rules.

From experience, I know that boards need to stay current on new coverages and those that have become important in recent years.  Here are two examples.

Pollution coverage, which is a separate policy taken out by the co-op or condo board, has become more popular in recent years. This coverage provides protection in the event of an environmental accident or problem such as oil overflowing into the basement during a delivery because the deliveryman overfilled the tank. The coverage would pay for cleanup, any health issues caused to staff or others and any other problems related to the accident or from vapors.  Other incidents include oil burner leaks and the release of carbon monoxide

In the wake of the vast destruction caused by Super Storm Sandy has come an increased emphasis on flood insurance.  Buildings in areas close to the ocean such as in the Rockaways and Coney Island have experienced large increases in their flood insurance premiums.  The storm has caused properties in many other areas which never considered flood insurance to re-evaluate and look to obtaining the coverage. Why?  A vast number of buildings and their residents suffered losses from the extensive loss of electricity when a Con Ed substation flooded and knocked out power in a wide swath of Manhattan. As the buildings and residents lacked flood insurance, they couldn’t collect. In addition, numerous buildings in Lower Manhattan suffered severe flood damage and could not collect.  While Sandy has been called the once in a century storm, with the increase in global warming and rising sea levels insurance brokers and agents are now taking a closer look at whether to recommend the coverage to clients. Flood insurance is excluded from basic policies and must be added on.

My advice for co-op and condo owners is to meet with their insurance agent or broker every year to go over coverages and see if theirs is sufficient.

Insurance is a cyclical business with premiums influenced by many factors including major occurrences such as Super Storm Sandy or devastating hurricanes such as Katrina which ravished the Gulf Coast a decade ago.  These major occurrences have an impact on insurance premiums throughout the nation.  In recent years, Owens said, rates have been fairly flat though the rates can go up if there have been several occurrences when the homeowner or building filed claims.

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