Monday, June 30, 2008

Tax Credits For Green Rooftops In NYC

http://www.environmentalleader.com/2008/06/29/tax-credits-for-green-rooftops-in-nyc/
June 29, 2008
Tax Credits For Green Rooftops In NYC

green_roof.jpgBuilding owners in New York City who install green rooftops on at least 50 percent of available rooftop space can apply for a one-year property tax credit of up to $100,000, Storm Water Infrastructure Matters (SWIM) reports.

Under a new bill passed by the New York legislature, the credit would be equal to $4.50 per square-foot of roof area that is planted with vegetation, or approximately 25 percent of the typical costs associated with the materials, labor, installation and design of the green roof.

Building owners can apply for the credit starting Jan. 1, 2009, under the pilot program that will expire after March 15, 2013, unless it is extended.

According to SWIM, the environmental benefits of the legislation are measurable. Each 10,000 square foot green roof, for instance, can capture between 6,000 and 12,000 gallons of water in each storm event, the evaporation of which will produce the equivalent of between a thousand and two thousand tons of air conditioning — enough heat removal to noticeably cool 10 acres of the city, SWIM says.

Green roofs are taking root in other areas too. The green roof industry in Germany is now annually worth $77 million, CNN reports.

Green roofs at the Metro-North Railroad’s Harmon Yard Support Shop, the MTA Bus Far Rockaway Depot, and the B&T Queens Midtown Tunnel Service Building Annex; and a white roof at the LIRR Hillside facility were among interim recommendations released by the Commission on Sustainability formed last summer to create a plan for reducing the agency’s ecological footprint by Earth Day 2008.

Green roofs are also catching on with businesses and organizations, from banks to libraries.


http://www.nydailynews.com/ny_local/bronx/2008/06/30/2008-06-30_state_legislature_approves_tax_breaks_fo.html
State legislature approves tax breaks for rooftop gardens
BY NICOLE ETTLINGER

Monday, June 30th 2008, 3:45 PM
James Chase, communications director of Sustainable South Bronx, installed a green roof at his home. Zalcman for News

James Chase, communications director of Sustainable South Bronx, installed a green roof at his home.

State lawmakers have approved a bill to give tax breaks to homeowners who install "green roofs" - gardens atop buildings.

The credit of $4.50 per square foot, approved last Monday, is about a quarter of the cost of a typical green roof.

"The biggest barrier to a green roof is upfront cost," said Rob Crauderueff, director of sustainable policy at the nonprofit group Sustainable South Bronx. "They typically cost $15 to $20 per square foot."

"It's long overdue," said Assemblyman Ruben Diaz Jr. (D-Bronx), who sponsored the bill. "This is a great step forward to ultimately combat our greatest problem - global warming."

Green rooftops lower energy costs, decrease runoff into sewerage systems and reduce respiratory problems, Crauderueff said.

The immediate benefit for homeowners and tenants is more greenbacks in their wallets.

"A typical building would save between 10% and 20% on air conditioning costs," he said. "It's nature's version of AC."

Assemblyman Jose Peralta (D-Jackson Heights) also applauded the tax breaks.

"This will get the ball rolling," he said. "Before the legislation, there were questions - 'Is this legal? How do we go about it?' Now that the legislation is passed, the questions have been answered."

Supporters said the legislation will also help spin off local "green" jobs.

"If you make an investment in the environment, you make an investment in the community," said James Chase, who created a green rooftop for his home in the South Bronx in October.

"The green roof looks pretty, but that's not its value. This is a great way to support life in New York City. It provides people a job with benefits and health insurance," said Chase, who is also director of communications at Sustainable South Bronx.

James Wells, a graduate of a training program sponsored by the nonprofit group, now installs and maintains rooftop gardens for SmartRoofs, a company that specializes in them.

"I had just come out of 10 years of prison and faced a lot of discrimination in employment. This was my last hope," Wells said. "It can help take people out of poverty."

The new tax incentive - akin to a popular solar panel rebate program in New Jersey - could be the tipping point for many homeowners, Chase said.

"It's not high-tech, it's green-tech," Chase said of the difference between solar panels and green roofs. "This abatement will be the push people need to say, 'Alright, I'm going to do it.'"

Thursday, June 26, 2008

Co-op shares popular for home hunters

The New York Sun
By 'Sharing,' Co-Ops Compete With Condos
A Niche Market Grows as New Yorkers Seek Cheaper Apartments

By CANDACE TAYLOR, Staff Reporter of the Sun
June 26, 2008
http://www.nysun.com/real-estate/by-sharing-co-ops-compete-with-condos/80716/

Cedric Bernard and his wife, Sandrine, were two months from the end of the lease on their two-bedroom apartment at 63rd Street and West End, and with a toddler in the house and another child on the way, they needed more space badly.

The condos they'd seen in Manhattan were too expensive, and they dreaded the idea of commuting from a house in Westchester. Then the Bernards came across a three-bedroom apartment at 55 W. 95th St. At $876,000, the unit was cheaper than most of the condos they had been looking at, and, because it was a sponsor unit, it lacked the restrictions of most co-ops: Board approval was not required and the Bernards were able to finance up to 90% of the purchase.

"It was kind of like getting a condo, but at a decent price," Mr. Bernard said.

A co-op unit is different from a condo in that it is owned by the entire building, with individual homeowners owning a set number of "shares" in the corporation. Co-op shares that have not yet been sold are known as sponsor units, or apartments the landlord has retained as a rentals.

As the price of co-ops slides lower in comparison to condos, sponsor units are becoming more sought after than ever by apartment hunters and investors, brokers said. Previously an under-the-radar niche market, the selling of co-op shares is gaining more visibility, with new companies such as Shares of New York, from which the Bernards bought their apartment, coming into the marketplace, and bargain hunters seeking deals in a time of economic slowdown.

"It's a way for co-ops to compete with condos," a senior managing partner at Warburg Realty, Judith Thorn, said. "They're priced much lower than condos, but you can buy them with the same ease — sometimes with more ease."

Most of New York's unsold shares appeared during the 1970s and 1980s, when landlords converted many rental buildings into co-ops. Rather than selling all of the apartments in the building, landlords held on to some shares to make sponsor units, continuing to rent them out and generate income. These rental units in co-ops are more common than many New Yorkers realize, according to Ms. Thorn. "Most co-op buildings in New York have a few unsold shares," she said.

Purchasing unsold shares has long been considered a risky investment because the units usually contain rent-controlled or rent-stabilized tenants, which makes it difficult for buyers to know when they'll be able to vacate the unit, sell it, and cash in on their investment.

Despite this difficulty, more buyers are cropping up, a principal of MJH Birchwood, Myles Horn, said. He recently purchased a 500-unit package of unsold shares in Queens, Manhattan, and Long Island, and said the number of bidders for the package was "astonishing."

"People used to say these deals had hair on them," he said. "Well, they've gone bald now. Everybody wants a piece."

The reason, he said, is that in today's high-priced New York market, "it's harder to find good real estate deals." That's especially true with credit having dried up even before prices have dropped. Meanwhile, more packages have popped up on the market in response to high sales prices. "People are sensing that the market is on a downward trend, so if they're going to get out before the next cycle, now's the time," he said.

These sponsor units tend to cost more than standard co-op units because of the freedom that comes with them, although they are less than condos. MJH Birchwood's the Towers at Water's Edge in Bayside, Queens has sold 50% of its available inventory of unsold shares in seven months.

"If you have a product that looks like a condo and acts like a condo, it tends to sell like a condo," Ms. Thorn said.

Shares of New York was able to gain a foothold in the market when it purchased a rare find — a large block of unsold shares, most of which were unoccupied, in three Upper West Side buildings. The company bought the package from sponsors who had owned the building since the 1950s and wanted to get out of the business, the director of sales for the company, Amy Goldberg, said. The company is now renovating the buildings' worn-down lobbies and hallways and many of the apartments, and selling the units individually to a new crop of buyers. Prices range between $650,000 for an as-is two-bedroom apartment and $2.29 million for a newly renovated three-bedroom.

"We're just breathing life into these old buildings," Ms. Goldberg said, adding that this opportunity is similar to buying a condo conversion years ago. "It's a new opportunity to come in and watch this grow."

Mr. Bernard said he is a fan of the condo-like features of the building, including a new lobby, elevators, and a gym in the basement. "Knowing there will be a lot of new people in the building was kind of exciting," he said. "We liked knowing that eight months from now everything will be brand new."

Background Checks on Co-op Applicants May Dig Deep

The New York Times
June 26, 2008
The Fix
Applicant Checks May Dig Deep
By JAY ROMANO
http://www.nytimes.com/2008/06/26/garden/26fix.html

BUYING a condo or co-op, or even renting an apartment, can be arduous, and most applicants understand that part of the process may involve being investigated by a board or a management company.

What some do not realize, however, is how extensive the inquiry might be.

Bruce A. Cholst, a Manhattan real estate lawyer, said his clients were using more tools, including the Internet, to predict whether someone would make a good neighbor.

For example, he said, he recently told one co-op board member that it was “perfectly legal” to search the Internet for information a prospective co-op buyer might have posted about herself. The board member went to Facebook.com, a social networking site geared to college students, and found, Mr. Cholst said, that “the applicant characterized her favorite activity as ‘partying.’ ”

“So his concerns about the person as a potential neighbor were legitimate,” Mr. Cholst said.

Boards or property owners might also search MySpace or LinkedIn, or search a person’s name using Google or Yahoo, but they might find nothing. In any case, information found on the Internet is not always reliable. But Mr. Cholst said that information people have posted about themselves under their name was “fair game” in a background check.

Most background research, with the exception of a check of an applicant’s credit history, does not require the permission of the person being investigated.

Arthur Davis, a Manhattan management consultant, said some boards and sellers had hired private investigators to check out prospective purchasers. A board might want to verify information on a buyer’s application. A seller in turn might not want to waste time with a buyer who could not win board approval.

As long as a co-op board does not discriminate for reasons prohibited by federal, state or local law — including race, religion, gender, sexual orientation, disability, and, in New York City, even occupation, among others — it generally has broad power to reject a sale, Mr. Davis said.

Condo boards have less power to block a purchase, Mr. Davis said, but they too are looking for information about potential owners.

Buyers are not the only applicants who might be investigated. Prospective rental tenants might find themselves under scrutiny.

Robert Grant, director of Midboro Management in Manhattan, which manages buildings for landlords and co-op and condo boards, said his company would ask former landlords if an applicant paid rent on time, got along with neighbors, was noisy or had an excessive number of guests. “We also try to get verification and longevity of employment,” Mr. Grant said, “and, if the employer is willing to provide it, the applicant’s future with the company.”

Another factor of interest to owners and boards is the tenant or buyer’s litigiousness. Many clients request a search of Housing Court and state Supreme Court records to determine whether an applicant has failed to pay rent or maintenance or is litigious, said Adam Leitman Bailey, a Manhattan real estate lawyer. “A few of our clients have us do criminal court searches,” he said.

Mr. Cholst said he would also recommend searching a prospective tenant’s name in the sex offender database maintained by each state under the requirements of Megan’s Law.

Boards and landlords also want to know about an applicant’s financial status. James Goldstick, vice president of Mark Greenberg Real Estate in Lake Success, N.Y., said his company did financial checks, looking for a prospective tenant’s credit history, bankruptcy filings, liens, judgments and collection accounts. That report, which costs about $60, is usually paid for by the management company or property owner, he said.

Wednesday, June 18, 2008

State bill could end tax benefits for condos, coops

Newsday.com
State bill could end tax benefits for condos, coops
BY ELIZABETH MOORE
elizabeth.moore@newsday.com
newsday.com/services/newspaper/printedition/wednesday/news/ny-stcond135731100jun18,0,3937701.story
June 18, 2008

ALBANY

Two town houses in gated Smithtown communities offer similar features and amenities such as a pool and clubhouse -- but one costs less than half as much in property tax as the other. The reason? It's a condo.

In Mount Sinai, an enclave of single-family homes offers good schools, ready access to a golf course -- and, because they're condos, less than half the tax bill paid by a comparably priced house outside their gate.

In Southold, officials have reluctantly decided only people 55 and older may live in a planned Cutchogue subdivision, because its 130 homes will pay less than half as much in school taxes as their neighbors do. That is because they're condos.

The "condo deal" is under fire
After years of pleas from frustrated local officials about New York State's rules for taxing condominiums, state lawmakers in the waning days of the current session hope to give them the power to at least put the brakes on building any more homes with tax breaks like these. That legislation is ready for final passage, but it has powerful opponents -- developers and condo owners -- and its fate is unclear.

"We need relief for this -- it's not fair to the other property owners," said Southampton tax assessor Edward Deyermond.

Smithtown's assessor Gregory Hild agreed: "I've been shouting on this thing for years."

New York State passed its law for co-ops and condos in 1964, as people began converting urban high-rise rental apartments to private ownership. The law was meant to protect them from being taxed more heavily than their former landlord, by assessing them by the entire building's potential rental value instead of each unit's market value.

New York City and Nassau County do not experience the current disparities because they later adopted a tax code that taxes commercial property more than homes and classifies high-rise condos as commercial, explained Thomas Frey, executive secretary of the state Assessors' Association. Later changes to that system taxed condos of three stories or fewer like other homes.

But the rest of the state, including Suffolk County, did not adopt that system, Frey said. And only gradually did developers elsewhere realize the condo law could be used to cut tax bills by up to two-thirds on all kinds of new developments and even existing subdivisions, from Montauk to the Adirondacks to Buffalo. Those tax savings have allowed them to market the homes for much higher prices than they could otherwise get.

"Condos are a relatively new phenomenon outside of New York City until the past 15 years," Frey said. "You never heard of a problem in western New York with condos until five years ago, but it's a major problem out there now."

Suffolk County Executive Steve Levy didn't return a call, but political observers and legislators say elected officials have been reluctant to incur the wrath of the growing number of condo owners.

Affordable or luxury?
In Suffolk County, at least 42,756 homes in 404 developments are condos or co-ops, according to the county planning department. Those include nine affordable developments and 54 for senior citizens. Many others are made up of luxury homes overlooking the waterfront or members-only golf courses. At least 18 Suffolk condo complexes are made up of detached, suburban-style houses.

Town officials are powerless to block condo construction or conversion because they are a form of ownership, not land use.

"People who don't have condos don't realize they are paying for them," said the leader of efforts to revise the law, State Sen. Betty Little (R-Glens Falls). "I think when people start to understand [the condo law], they see there are more people being hurt by it than helped."

Little and her Assembly counterpart, Sandy Galef (D-Westchester), are proposing to leave tax breaks intact on existing condominiums and co-ops, but allow local communities to impose their standard assessment rules on those converted or built after Jan. 1, 2010.

The state Association of Towns, Conference of Mayors and Association of Counties have been urging lawmakers to close the condo loophole for years. In a hearing earlier this month, Lee Kyriacou, director of the state's Office of Real Property Services, called it "far too broad a tax break to serve any valid purpose -- developers are driving a truck through it."

But year after year, bills have been defeated under fierce resistance by the developers' lobby and by condo owners whose homes would be worth dramatically less on the market if they lost the tax break.

"This [proposal] is a pretty watered-down version of our bill," said Little. "I think we decided we wouldn't get very far taking them [the tax breaks] away from people."

They may not get very far either way, Galef found when she co-hosted a Long Island hearing on this year's bill with Assemb. Ginny Fields (D-Oakdale). The people they found packing the room were angry condo owners; the fact that the bill wasn't aimed at them was irrelevant -- if this one isn't, they figured the next one would be. Their ire was enough to turn Fields into an opponent of Little and Galef's bill.

"At first I thought [ending the tax break] was a great idea," Fields said. "But what was very strongly brought up by the people is, it basically is affordable housing for senior citizens."

Lobbyists vs. homeowners
The state builders association, representing builders, remodelers and developers, also opposes Little's measure this year. "These co-op and condo developments should be encouraged because the increased density of such development is in accord with the principles of smart growth," executive vice president Philip LaRocque testified.

That is not the view in Southold, where residents have been up in arms over plans to build The Heritage at Cutchogue, 130 high-end homes on 45 acres just outside the historic downtown.

As condominium owners, Heritage residents will get a total reduction of about $1 million in taxes each year. Alarmed about the impact on schools, the town added a covenant restricting it to owners aged 55 and older. But town board member Tom Wickham is dismayed about the changes it will bring to the hamlet his ancestors settled in the 1600s.

"Is that what we want for our community -- is that the price we have to pay for all the condominium developments in our town?" he said. "This law is distorting the family composition of people living out here."

CONDOS VS. COOPS

Definitions
A condominium is a building or multiple-unit complex where residents own their individual living space and share joint ownership of common hallways, driveways and surrounding land.

A cooperative is jointly owned real estate whose shareholders are granted the right to occupy their individual unit.

How the condo law works
New York passed its condominium law in 1964 to protect buyers of urban high-rise apartments from being taxed more than the landlords. Developers have used that law to cut taxes by as much as two-thirds on properties from Montauk to Buffalo, building ever-bigger homes and even converting existing subdivisions. They can market the tax savings and charge more for the homes. Tax experts say the loophole is unfair to other homeowners, but fierce resistance from developers and condo owners has killed several efforts to close it. This time around, state lawmakers propose at least giving local communities the option to block new condo developments after 2010. Nassau's tax code compensates for the condo law, but Suffolk's does not. Below are examples of how much less condo owners are paying

Amityville

PRIVATE HOME

Address: Van Nostrand Place

Year Built: 1948

Sale Price: $455,000 (Jan. 2008)

Taxes this year: $7,629.52

SNUG HARBOR CONDOS

Address: Harbor Road North

Year Built: 1974

Sale Price: $460,000 (June 2007)

Taxes this year: $2,843.54

East Hampton

PRIVATE HOME

Address: Hayseed Way

Year Built: 1983

Sale Price: $1,075,000 (Jan. 2007)

Taxes this year: $6,898.00

GEORGICA ESTATES CONDOS

Address: Huckleberry Lane

Year Built: 1985

Sale price: $1,150,000 (April 2008)

Taxes this year: $1,851.00

Melville

Fig Dr.

Built 2003

Sale price: $1.4M ('07)

Taxes: $21,568.59

THE GREENS AT HALF HOLLOW CONDOS

Altessa Blvd.

Built 2004

$1.4M ('07)

Taxes: $7,284.75

Mt. Sinai

PRIVATE HOME

Remsen Court

Built 1987

Sale price: $850,000 ('08)

Taxes: $17,276.49

HAMLET AT WILLOW CREEK CONDOS

Hamlet Drive

Built 2004

$825,000 ('07)

Taxes: $8,421.26

Copyright © 2008, Newsday Inc.

Wednesday, June 11, 2008

Should all co-op applications be the same?

Seems like the only ones this would benefit would be the brokers helping their buyer-clients put together their co-op purchase applications.


The Real Deal
Author: Lauren Elkies
Should all co-op applications be the same?
June, 02, 2008
http://ny.therealdeal.com/articles/should-all-co-op-applications-be-the-same

It's a process that can be a veritable nightmare: getting a mortgage loan approved, supplying personal information, preparing financial documents, acquiring reference letters, undergoing credit checks and finally, making numerous collated copies of the package for review by the property manager and co-op board — and all that's before the fateful interview.

Besides being extensive and intricate, co-op board applications are not uniform, and with roughly 2,500 co-op buildings in Manhattan alone, that can amount to a lot of different variations. Now even condos have become fussier, with applications similar to those required at co-ops.

Some real estate pros think the co-op application process could be simplified with a standardized application. The topic was addressed at a recent meeting of the Real Estate Board of New York sales council, a group of brokers who liaise between REBNY and its member brokers. Alan Pfeifer, a senior vice president at Halstead Property and co-chair of REBNY's sales council, said the group decided at its May meeting to form a subcommittee that will work on the uniform application in September, when the council reconvenes.

Proponents of a standard form say that it could make matters simpler for managing agents, who oversee the building's day-to-day maintenance and finances, and for buyers and their brokers, who would know from the get-go what the board was looking for. Opponents say that managing agents are lame ducks, so their preferences are irrelevant, and since all co-op boards basically ask for the same information, brokers should know how to prepare their buyers. In addition, a uniform application does not work for boards seeking additional information.

Anthony Miller, a vice president at Bellmarc Realty who initially raised the standardization issue at a previous sales council meeting, said, "I got sick and tired of board packages that maybe don't serve the interests of the boards nor the managing agents and can drive both buyers, sellers and brokers absolutely crazy."

Miller said that he recently helped a couple prepare the financials for an application to a co-op. The board wanted the assets to be divided between the husband and wife.

"This doesn't really help matters because in no case did it show what the combined assets were," he said. "That's an example of a bad format. It makes the asset total look weaker than it actually is."

Miller said that a standard form could be used on a voluntary basis, and buildings would be able to customize it with a "rider or an addendum to the application."

Not everyone thinks uniformity is a good thing.

Arthur Weinstein, vice president of the Council of New York Cooperatives & Condominiums, a not-for-profit organization for housing cooperatives and condominiums in the New York area, and a real estate attorney, thinks standardizing the forms is a "terrible idea." He added, "It's a stupid idea because each building has its own concerns."

One building with porous interior walls that he represents asks on the application about smoking habits because many of the building's residents are asthmatics who cannot have smokers dwelling in the building.

"Other buildings wouldn't care less about smoking," Weinstein said.

So long as it's legal, "the whole point of the matter is to live in a co-op, you should be able to pick who your neighbors are going to be," Weinstein said.

Still, a voluntary standard form could be a decent idea, he acknowledged, and a good jumping-off point.

But as private corporations with total autonomy, many co-op boards would be opposed to the new approach, he said.

Frederick Peters, president of Warburg Realty Partnership, said that while managing agents might be amenable to using a standard board package, the boards would not be because "they're not going to want some outside body telling them what to do. They want the autonomy."

Some buildings are more interested in social issues than others, with questions about a would-be buyer's friends and organization memberships. Other buildings emphasize more rigorous background checks. Still others want to know about pet ownership and subletting.

Kathy Braddock, co-founder of real estate consulting firm Braddock + Purcell and the New York City real estate company Charles Rutenberg Realty, said that there is no way a co-op board is going to agree to use a standard form.

Besides, the application isn't the issue since they all pretty much ask for the same information. Preparing a successful package is more about what's not in the application.

"It's not what you need; it's how it's presented, how it's tweaked," she said.

An application may ask who will be residing in an apartment, for example, but only someone familiar with a specific board would know that the board only approves couples with a maximum of two children. Or, a board may specify the number of references on the application, but only someone knowledgeable about the building would know its board only accepts written references.

Managing agents often run a number of buildings, and a uniform application would make their lives easier.

Donna Weinberg, a management executive at Lawrence Properties, a residential management and brokerage firm, said she thinks a standard form would be "great." The applications at the company's 60 residential buildings, 95 percent of which are co-ops, all have the same financial and reference requirements, but some of the building's house rules may be different, Weinberg said.

Anita Sapirman, founder and president of Saparn Realty, a residential management firm, said that she uses a standard application but alters it to suit each building.

"Usually, you can have one that is fairly standardized and then try to accommodate that particular board, adding some little item that they may want," Sapirman said.

She uses a uniform rental application.

"For me, it's a great idea. I love that it would be one standardized form. It just makes it simpler for my staff to go to the board and say, 'Here's the application; let's use this,'" Sapirman said.

Neil Binder, principal of Bellmarc Realty, which has a property management arm in addition to its main business, residential brokerage, said he would not support standardizing co-op applications.

"Different buildings have different criteria that they feel are pertinent to their evaluation search. There is already a number of 'standard forms' including those proposed by Bellmarc," Binder said. "Invariably, boards have objections to these forms and wish to have additional elements added."


Anthony Miller of Bellmarc said he's "sick and tired" of the co-op application process.

Sunday, June 8, 2008

The Geology of Cool

I don't know how easy it would be to install one of these systems in an existing building, but it might be worth investigating.


The New York Times
June 8, 2008
Posting
The Geology of Cool
By C. J. HUGHES
http://www.nytimes.com/2008/06/08/realestate/08post.html

THE idea that burrowing underground could somehow help you cool off on a hot summer day might seem illogical — especially to anyone who rides the subway, where platforms at this time of year can be sweltering.

But burrowing is exactly what geothermal heat pumps do to reduce temperatures. They work because the ground hundreds of feet down remains a fairly constant 55 degrees Fahrenheit. Absorbing heat into water, they whisk it downward, disperse it and then resend it, newly chilled, back to the surface.

The technology has existed since World War II; newly eco-conscious developers are taking advantage of its greenness. In cooling a room, it uses about half the electricity of the typical air-conditioner and produces fewer carbon emissions.

The pumps can be four times more expensive to install than traditional heating and cooling systems, partly because thick bedrock and narrow lots complicate drilling the deep wells they need. But they can pay for themselves in a decade, according to developers, engineers and industry leaders.

A few multiunit buildings in the area are therefore trying out the technology.

One is 180 East 93rd Street, a seven-story brick-and-limestone condo rising between Third and Lexington Avenues. Its nine units, all three- and four-bedrooms with corresponding numbers of baths, range from 1,450 to 3,300 square feet; they will have slate kitchen counters and white oak floors, says Douglas Benach of Greystone Property Development, the builder.

While excavation has begun, sales figures for the $30 million project await approval by the state attorney general; Mr. Benach expects prices of $2.7 million to $7 million, based on market rates.

The system, whose subterranean portions will be drilled in August, will cost about $400,000; conventional systems run $100,000, Mr. Benach said. Still, they should ultimately reduce common charges and obviate the need for bulky roof equipment, he said.

They do take up room in the basement, however. This can cut into key condo common areas, says Carlton Brown, the chief operating officer of Full Spectrum of NY. That was why Mr. Brown shelved geothermal plans at the Kalahari, at 40 West 116th Street, near Fifth Avenue in Harlem, where it would have meant losing a few of the building’s eight squash courts.

Closings begin this week at the 12-story condo, which was co-developed with L & M Development Partners of Larchmont, N.Y. Its 249 units — studios to four-bedrooms — are 90 percent sold; those remaining are priced from $695,000 to $1.7 million, he said.

Another deal-breaking worry is that drilling could harm nearby foundations, says Gita Nandan of Thread Collective in Bushwick, Brooklyn.

Ms. Nandan had considered a geothermal system for the five-floor 6,500-square-foot condo she is putting up at 225 Troutman Street. She ended up deciding that given all the challenges, there were easier ways of going green.


Lorelli

ENERGY WITHIN Builders of 180 East 93rd Street are installing geothermal technology.

Tuesday, June 3, 2008

Fire insurance might not exclude terrorism

Check the requirements of your building's insurance and your proprietary lease, and then make sure your tenants have insurance that complies. Your tenants may have terrorism damage exclusions that are now disallowed.


The New York Observer
Solow Loses Fire Insurance Case; Nationwide Impact Likely
by Dana Rubinstein
June 3, 2008
http://www.observer.com/2008/sheldon-solow-loses-fire-insurance-case-repercussions-national-insurance-industry

New York State’s highest court today ruled against developer Sheldon Solow in a case that should have repercussions for fire-insurance holders nationwide.

In a unanimous decision, the New York State Court of Appeals ruled that when a lease requires a tenant to purchase fire insurance, that insurance cannot specifically exclude damages caused by terrorism.

The case, TAG 380, LLC v ComMet 380, Inc., involved none other than legendarily litigious New York developer Sheldon Solow, a tenant of ComMet, the fee-owner of 380 Madison Avenue.

Following September 11, when terrorism insurance prices shot through the roof, Mr. Solow’s insurance policy was coming up for renewal. ComMet asked that Mr. Solow purchase insurance that included damages caused by terrorism, even if though Mr. Solow's lease did not explicity mention the word "terrorism."

Mr. Solow instead purchased fire insurance that explicity excluded terrorism coverage. He argued that the fire insurance language in the lease could not be construed to encompass terrorism damages.

Today, the Court of Appeals refuted Mr. Solow's argument.

In its decision, the court argued that Mr. Solow’s lease required that he purchase insurance “for the building against fire and loss or damage by other risks under the Standard Fire Insurance Policy and Endorsement, covering windstorm, hail, smoke, riot, civil commotion, explosion and physical contact with the building by an aircraft or vehicle, irrespective of whether the mechanism of loss was the result of a terrorist act.”

Bruce Paulsen, the partner at Seward & Kissel LLP who represented ComMet, said the repercussions for the insurance industry will be vast.

“This not only implicates landlords and tenants but also lenders and borrowers,” Mr. Paulsen said. “For anyone who has in their mortgage or lease language similar to this lease, the tenant won’t be able to attain insurance that excludes terrorism.

"This even [pertains] to homeowners that have standard fire policy language," Mr. Paulsen said.

In other words, if you own an apartment in a building for which you maintain fire insurance and a suicide bomber should detonate himself in your lobby, your insurance company will have to cover the damages.

A representative for Mr. Solow did not immediately respond to a request for comment.

http://www.nycourts.gov/ctapps/decisions/jun08/79opn08.pdf

Monday, June 2, 2008

Crackdown Sought on Illegal Hotels in the City

Watch out for your building tenants illegally renting their units as tourist hotels. Make sure you instruct your doormen / concierge what to look for. According to the Times, you can see "sublessors" advertising on websites like hotels.com and expedia.com.

Today's article seems to follow up on this one: http://nyccoopcondo.blogspot.com/2007/09/as-tourists-find-rooms-tenants-face.html


Crackdown Sought on Illegal Hotels in the City

The New York Sun
By ROSS GOLDBERG, Special to the Sun
June 2, 2008
http://www.nysun.com/new-york/crackdown-sought-on-illegal-hotels-in-the-city/79075/

In the wake of a report that says owners of more than 200 residential buildings in Manhattan are improperly renting to tourists, elected officials are calling on Mayor Bloomberg and Governor Paterson to pass legislation cracking down on illegal hotels.

The report, compiled by the Illegal Hotels Working Group, said landlords are exploiting a loophole under which they can rent out "affordable" housing for short-term stays and risk only a onetime $800 fine. Because building owners can make thousands of dollars each night from tourists, elected officials said, the fine is insignificant.

"It's creating incentives for landlords to push out tenants," a member of the City Council, Daniel Garodnick, said at a press conference in Midtown yesterday. "Illegal hotels are proliferating in Manhattan, and it has to stop."

The report also states that more than 20 of the buildings have unfairly benefited from $188 million in tax abatements intended for "affordable" housing units.

The lawmakers are suggesting bills be introduced to increase the penalties for operating the hotels and clarify legal language prohibiting short-term leases in certain buildings. One such measure has already been proposed in the City Council.

Matthew Abuelo, a tenant at 345 W. 86th St., a building that is allegedly operating as an illegal hotel, said the influx of tourists has resulted in constant noise and broken elevators.

"Our neighbors have been getting harassed endlessly," Mr. Abuelo said. "If anyone tries to talk to the landlord, they get blown off."

Some of the buildings listed in the report include Trump Place on Riverside Boulevard and Worldwide Plaza on West 50th Street. The managers of the buildings could not be reached for comment.

Don Lewis, the owner of another of the buildings listed in the report, Riverside Tower, said his building is a legitimate hotel. He said he could have been accused because the hotel also contains 14 permanent tenants. He said the scope of illegal hotel operation in New York has been "vastly" overstated.

"We have every right to rent to tourists," Mr. Lewis said. "There are very decent hotels that have a handful of permanent residents in their buildings."

A spokesman for the mayor's office of special enforcement, Jason Post, said the Bloomberg administration is working with the City Council to find a solution. "As the report released today notes, the Mayor created the Office of Special Enforcement as a dedicated unit to follow up on quality of life issues like illegal hotels. The problem has grown out of a gray area in the law, which the Administration, in response to discussions with the illegal hotels task force, has developed a framework to fix," Mr. Post said in a statement.

Sunday, June 1, 2008

Controlling Environmental Tobacco Smoke in Condominiums

ABA's Probate & Property Magazine, May/June 2008
Butt Out! Controlling Environmental Tobacco Smoke in Condominiums
By Cara L. Thomas
Cara L. Thomas is corporate counsel at Halvorsen Holdings in Boca Raton, Florida. The author completed this article while a third-year law student at Nova Southeastern University, Shepard Broad Law Center.
http://www.abanet.org/rppt/publications/magazine/2008/mj/Thomas.html

Secondhand smoke, also known as “environmental tobacco smoke” (ETS), contains more than 4,000 chemicals, including 200 poisons and 43 carcinogens. ETS is a combination of (1) “mainstream smoke,” which is exhaled by those actually smoking tobacco, and (2) “sidestream smoke,” which enters the environment directly from the burning end of a cigarette. Although mainstream smoke can be filtered twice, once by the cigarette filter and again by the smoker’s lungs, sidestream smoke is largely unfiltered and thus contains higher concentrations of dangerous compounds and particulate matter. Because of the existence of harmful pollutants and noxious compounds in ETS, the U.S. Environmental Protection Agency (EPA) has declared ETS a Group A carcinogen, “a rating reserved ‘only for [those] substances proven to cause cancer in humans.’” Emily Heady, Comment, Valid Concerns over Environmental Tobacco Smoke or Rights Going Up in Smoke? An Analysis of Foundation for Independent Living, Inc. v. Cabell-Huntington Board of Health, 19 J. Nat’l Resources & Envtl. L. 247 (2004–2005).
Most people feel that nonsmokers should have a right to avoid forced exposure to ETS because society has realized that ETS is harmful. Traditionally, however, smokers have enjoyed dominance with “the balance of power tipped sharply in favor of a smoker’s right to smoke regardless of the objections of nonsmokers.” David B. Ezra, Sticks and Stones Can Break My Bones, But Tobacco Smoke Can Kill Me: Can We Protect Children from Parents That Smoke?, 13 St. Louis U. Pub. L. Rev. 547, 557 (1994). A smoker’s belief in a right to smoke has been ingrained from well-grounded custom because tobacco has been an essential part of the American economy from the very beginning. Even before Columbus reached America in 1492, Native Americans grew and smoked tobacco. After Columbus introduced tobacco to Europe, American colonists in Virginia established an economy aimed largely at meeting the new European demand for tobacco.
From the 1600s to the present, however, tobacco’s popularity has experienced many ups and downs. By 1955, 62% of American men between the ages of 25 and 44 smoked tobacco. With so many people smoking, smokers naturally stopped asking permission to smoke and started smoking whenever and wherever they wanted. Thus, smoking became a widespread privilege, and probably considered a de facto right. The tide has shifted, however, since a 1964 Surgeon General’s report declared that smoking could be harmful to smokers. More recently, the EPA estimated that ETS causes approximately 3,400 lung cancer deaths and 46,000 heart disease deaths in adult nonsmokers in the United States each year. See American Lung Association, Secondhand Smoke Fact Sheet (June 2007), available at www.lungusa.org/site/pp.asp?c=dvLUK9O0E&b=35422 (last visited Jan. 23, 2008). Empowered by these findings, nonsmokers have lobbied their legislators, formed activist groups, and pursued lawsuits to limit their exposure to ETS. In response, governments and private entities have implemented expansive smoking restrictions.
Although smokers may be prohibited from lighting up in many public places, they still cherish their unfettered freedom to smoke in the privacy of their own homes. “As the Tobacco Institute argues, ‘reasonable people agree that no one should be able to dictate what legal activities we can or can’t do in our own homes.’” David B. Ezra, “Get Your Ashes Out of My Living Room!”: Controlling Tobacco Smoke in Multi-Unit Residential Housing, 54 Rutgers L. Rev. 135, 137 (2001). Yet heated disputes, similar to those that led to the prohibition of smoking in the workplace, restaurants, airplanes, and other public places, are beginning to arise between smokers and nonsmokers living in multi-unit housing such as condominiums, apartments, and townhomes. Because of the close proximity between units, ETS is traveling from one unit to another by wind or ventilation systems and resulting in a clash of “rights.” Smokers believe that they have a right to smoke in their own homes, while nonsmokers believe that they have a right not to be exposed to harmful ETS in their own homes.
This article addresses the current debate over smoker versus nonsmoker “rights” in the sanctity of one’s own home and, more specifically, whether nonsmoking condominiums may be the next evolution in smoking restrictions.

Smoking Disputes in Multi-unit Housing
Whether smoking a pack a day or two packs a day, most smokers follow a fairly consistent smoking routine. Therefore, because of the ambient nature of tobacco smoke, “nonsmokers may perceive the invasiveness of a neighbor’s tobacco smoke as a constant, if not relentless, irritant.” Ezra, “Get Your Ashes Out,” supra, at 156. Smoke, which to most is perceived as having a foul odor, can travel from one unit to the next through shared ventilation ducts, openings for electrical outlets, improperly sealed construction components, or even open windows or doors.
Although nonsmokers’ continuous exposure to ETS has resulted in a wide array of acute reactions, such as sore throats and hoarseness; persistent coughs, sinus problems; burning, itching, and tearing eyes; headaches; and nasal irritation, the major concern is the possibility of extremely serious, and possibly deadly, long-term health risks such as lung cancer or heart disease. Both the health concerns and the fact that tobacco smoke can linger in carpets, draperies, and clothing for extensive periods of time have initiated some very emotional and combative disputes between smokers and nonsmokers residing in neighboring units of multi-unit residential housing, with some disputes eventually leading to litigation.
The first reported neighbor versus neighbor smoking case, Lipsman v. McPherson, was filed in Middlesex County, Massachusetts, in 1991. Mark Hansen, Smoke Gets in Your High-Rise, 84 A.B.A. J. 24 (Nov. 1998) (citing Lipsman, No. 90-1918, 19 M.L.W. 1605 (Middlesex, Mass., Super. Ct. 1991)). In Lipsman, an apartment dweller sued his neighbor, alleging that smoke from the neighbor’s apartment was seeping into his, causing him annoyance and discomfort and subjecting him to an increased risk of physical harm. Although the plaintiff “technically” lost the case, the plaintiff indirectly won the battle because the defendant vacated his apartment less than a month after the decision was rendered. So the first case concerning smoking in multi-unit residential housing set an unfavorable precedent for nonsmokers, but it opened the door for other similar smoking cases.
For instance, in Fox Point Apt. v. Kippes, a landlord permitted a known smoker to move into the apartment directly below a nonsmoking tenant. Hansen, supra (citing Fox Point Apt., No. 92-6924 (Clackamas County, Or., Dist. Ct. 1992)). When the nonsmoking tenant began to experience nausea, swollen membranes, and respiratory problems from the cigarette smoke entering her apartment, she sued her landlord, alleging breach of his statutory duty to keep the premises habitable. A six-person jury unanimously found a breach of habitability, reduced the tenant’s rent by 50%, and awarded her money to cover her medical bills. Then, in 1994, an Ohio appellate court held that secondhand smoke could be considered a breach of a lease’s implied guarantee of “quiet enjoyment” of a rental unit. Dworkin v. Paley, 638 N.E.2d 636, 639 (Ohio. Ct. App. 1994); see also Poyck v. Bryant, 820 N.Y.S.2d 774 (Civ. Ct. 2006) (finding genuine issues of fact that precluded summary judgment on tenant’s claim that secondhand smoke from neighboring apartment violated the implied warranty of habitability and caused a constructive eviction). Perhaps the nonsmokers’ greatest victory occurred in June 1998, in the case of 50-58 Gainsborough St. Realty Trust v. Haile, when a Boston housing court judge awarded $4,350 to a couple because their landlord failed to prevent smoke from a bar directly beneath the couple’s apartment from escaping through the fireplace and the electrical outlets. Hansen, supra (citing Haile, No. 98-02279 (Mass. Hous., Boston Div., filed June 8, 1998)). The judge, in the first-ever written decision on the subject, held that the smoke had made the couple’s apartment “unfit for smokers and nonsmokers alike” and had interfered with the tenants’ right to “quiet enjoyment” of their property.
The earliest cases concerning neighbor versus neighbor smoking disputes involved rental apartments. Then condominiums also became litigation battlefields of aggrieved nonsmokers bothered by a neighbor’s secondhand smoke. The first lawsuit involving a smoking dispute in a condominium was Platt v. Landi in 1996. Ezra, “Get Your Ashes Out,” supra, at 171 (citing No. BC 152452 (L.A. Super. Ct., filed June 21, 1996)). In that case, the plaintiff, Roy Platt, sued his neighbors, his condominium association, and various officers and directors of the association, alleging that he had “been exposed to and had to endure substantial and excessive quantities of secondhand smoke from cigarettes and cigars being smoked by one or both of the Landis.” Id. In addition, Platt asserted that “the association had failed to control his neighbors’ smoking to prevent what amounted to a nuisance and a breach of the applicable conditions, covenants, and restrictions.” Id. Finally, Platt alleged that the “situation had become emotionally charged, with his neighbors’ ‘intentionally thrust[ing] lit cigars and/or cigarettes in the plaintiff’s face’ and allegedly threatening Platt and his guests with ‘physical harm.’” Id. Although Platt was unable to convince a jury to award damages, he believed that he was ultimately successful because the filing of the suit “caused the Landis to drastically reduce the number of cigarettes and cigars smoked in their condominium unit.” Id.
Although similar litigation has continued to erupt all over the country, a Florida trial court wrote a comprehensive decision in June 2005 analyzing the applicable laws regarding a neighbor versus neighbor smoking dispute in a condominium. In Merrill v. Bosser, the Merrill family purchased a condominium unit at the Palm Aire Condominium in Pompano Beach. Merrill v. Bosser, No. 05-4239 (Fla. Cir. Ct., filed June 29, 2005); see also Rob Samouce, Second Hand Smoke Can Be Considered a Legally Actionable Nuisance, Naplesnews.com, Nov. 8, 2005, www.naplesnews.com/news/2005/nov/08/ndn_rob_samouce__second_hand_smoke_can_be_consider (last visited Jan. 15, 2008). The Merrills’ neighbor, Bosser, lived in a unit one floor up and one unit over from the Merrills. Although Bosser was a pack-a-day smoker, there were no noticeable smoke problems until Bosser allowed a tenant, who was also a smoker, to move into the unit. Shortly thereafter, the Merrills, as well as residents living directly next door to Bosser, noticed smoke from Bosser’s unit seeping into their units on a regular basis, with the most bothersome problem in the bathrooms.
Merrill acknowledged that her family was hypersensitive to smoke because of a history of respiratory allergies but insisted that the smoke caused their health to deteriorate. When Merrill attempted to ameliorate the problem by installing air purifiers in her home, the smoke still persisted. Merrill complained directly to Bosser and to the condominium association. Eventually, the condominium association installed a mechanical fan to draw air from the common shafts up through the roof, but the problem still was not resolved. The smoke was so bad on several occasions that the Merrills had to sleep elsewhere, and, on one occasion, the smoke detector went off.
When the smoke problem continued for almost a year, the Merrills used the Palm Aire Declaration of Condominium as a basis to bring suit against Bosser for damages under theories of trespass, common law nuisance, and breach of covenant. The Palm Aire Declaration of Condominium provided, in part, that a “unit owner shall not permit or suffer anything to be done . . . in his unit . . . which will . . . interfere with the rights of other unit owners or annoy them by unreasonable noises, or otherwise, or shall the unit owners commit or permit any nuisance . . . in or about the Condominium property.” Merrill, No. 05-4239.
On the trespass theory, the trial court acknowledged that “in Florida, common secondhand smoke which is customarily part of everyday life would not be actionable in trespass.” Id. The court stated, however, that “[a] trespass need not be inflicted directly on another’s realty, but may be committed by discharging a foreign polluting matter at a point beyond the boundary of such realty.” Id. The court concluded that the evidence in this case demonstrated something more than customary secondhand smoke, thereby giving rise to a disturbance of possession or trespass.
Concerning the nuisance theory, the trial court referred to a Nebraska case, Thomsen v. Greve, in which smoke from a wood-burning stove had entered the Thomsen’s home approximately 140 times over four years. Id. (citing 550 N.W.2d 49, 55 (Neb. Ct. App. 1996)). The Thomsen court held that “to have the use and enjoyment of one’s home interfered with by smoke, odor, and similar attacks upon one’s senses is a serious harm.” Thomsen, 550 N.W.2d at 55. Therefore, the Florida trial court said that the facts of the instant case, although not as egregious as the Thomsen case, “demonstrate an interference with property on numerous occasions that goes beyond mere inconvenience or customary conduct.” Merrill, No. 05-4239. Merrill and her family “had recurring illnesses as a result of the smoke, and on several occasions had to vacate the premises.” Id.
Lastly, as to the breach of covenant theory, the Merrill court said that the Declaration of Condominium contained a covenant of quiet enjoyment, which is breached when a party “obstructs, interferes with, or takes away from another party in a substantial degree the beneficial use of the property.” Id. Relying on the Haile case discussed above, the trial court said that the “instant case is similar to Haile in that smoke actually seeped into the Plaintiff’s apartment from the Defendant’s apartment on numerous occasions, once causing the smoke detector to sound and several times causing the Plaintiff’s family to have to sleep elsewhere.” Id.
The Merrill family was ultimately awarded medical expenses, loss of use of the premises, and remedial expenses. As a result, the Merrill case, although only a state trial court decision, is a persuasive case that can be used to argue that “excessive” secondhand smoke gives rise to a legal action for trespass, nuisance, and breach of covenant. Samouce, supra.

The Effect of Smoking on Condominiums
Although secondhand smoke may have a negative effect on nonsmokers’ enjoyment of their condominium units, smokers are also residents of condominium communities and, absent valid prohibitions against smoking, have the same rights under the governing documents as the nonsmokers. Nonetheless, although “William Pitt, Earl of Chatham, may have declared, in a famous speech to Parliament, that a man’s home is his castle, this is not necessarily true of condominiums.” See Kilgore v. 2970 Lakeshore Drive Condo. Ass’n, No. 95-C-4746, 1996 WL 31159, at *1 (N.D. Ill. Jan. 26, 1996). “Condominium associations and other home owners’ associations impose a variety of restrictions on owners—restrictions on pets, children, leasing, the color of draperies, times one may move in and out, the color of trash bags—ostensibly for the purpose of enhancing the quality of life in the condominium community by controlling aesthetics and behavior.” David E. Grassmick, Minding the Neighbor’s Business: Just How Far Can Condominium Owners’ Associations Go in Deciding Who Can Move into the Building?, 2002 U. Ill. L. Rev. 185, 185.
In the past, community associations routinely viewed disputes between neighbors as matters not involving the association and directed combatants to work out their problems between themselves. Today, community associations cannot ignore neighbor versus neighbor disputes because the governing documents—which often include articles of incorporation, a declaration of conditions, covenants, and restrictions, bylaws, and association rules—impose a duty to act in some situations. If the association fails to act, unit owners can sue the association for damages and an injunction to compel the association to enforce the provisions in the governing documents.
Declarations typically provide that each unit owner is entitled to the “quiet enjoyment of the unit,” which means “exclusive use and possession of his or her unit, free of unnecessary nuisances, but subject to the association’s right of access for maintenance and repair of the condominium property.” Peter M. Dunbar, Condominium Concept: A Practical Guide for Officers, Owners, Realtors, Attorneys, and Directors of Florida Condominiums 255 (Pineapple Press, Inc. 2005). Moreover, declarations usually provide that “unless the declaration says otherwise,” the association is responsible “for repairing, replacing, or maintaining the common areas, other than the exclusive use common areas.” Id. In the context of neighbor versus neighbor smoking disputes, nonsmokers are likely to view involuntary exposure to a neighbor’s tobacco smoke as a nuisance, which would be a breach of the covenant of quiet enjoyment. Because the association has a fiduciary duty to act when a violation of the governing documents occurs, the nonsmoker is likely to insist that the association remedy the situation. In addition, when transfer of smoke from one unit to another is blamed on poor construction or maintenance, the nonsmoker also may believe that the association has a duty to correct that problem as well.
Although one trial court held that a neighbor’s excessive secondhand smoke was a nuisance, Merrill v. Bosser, No. 05-4239 (Fla. Cir. Ct., filed June 29, 2005), it is still unclear whether tobacco smoke entering an owner’s condominium unit would violate most declaration provisions regarding nuisances. Nonetheless, tobacco smoke, much like noise, has the potential to generate hostile and emotional disputes between neighbors that may implicate construction and/or maintenance issues. If condominium associations fail to comply with their fiduciary duty and take steps to address residential smoking issues, they may find themselves as involuntary referees in disputes between neighbors, or worse, defendants in a lawsuit.
Even if secondhand smoke is not considered to be a nuisance, a condominium association may eventually find itself in court fighting a discrimination suit under the federal Fair Housing Amendments Act of 1988, which extended the cloak of protection of the fair housing law to “handicapped individuals.” The Act “requires a housing provider to make reasonable accommodations in rules, policies, practices, or services when such accommodations may be necessary to afford a disabled person equal opportunity to use and enjoy a dwelling unit, including public and common use areas.” Gary A. Poliakoff, Prescription Pets: The New Miracle Drug, 2 J. Cmty. Ass’n L. 74 (Community Ass’ns Inst. 1999); see also 42 U.S.C. § 3604(f)(2), (3)(B). Because courts have suggested in other contexts that “’hypersensitivity’ to tobacco smoke qualifies as a handicap,” condominium associations may be forced to reasonably accommodate nonsmokers when ETS from a neighbor’s unit causes health problems, such as asthma or allergies. Ezra, “Get Your Ashes Out,” supra, at 168 (citing Kamen v. AT&T, 791 F.2d 1006 (2d Cir. 1986) (holding in an action against employer under section 504 of the Rehabilitation Act of 1973, 29 U.S.C. § 794 (1982), that a woman who had a lifelong history of severe tobacco smoke hypersensitivity “is very likely a ‘handicapped individual.’” Id. at 1013.).
The question then becomes what is a reasonable accommodation for nonsmokers in a condominium. In a complaint filed against the Seattle Housing Authority (SHA) on July 23, 2001, the Justice Department alleged that the SHA failed to provide a reasonable accommodation to a tenant resident with allergies and asthma who was suffering from secondhand smoke exposure. Ronald B. Glazer, Representation of Common Interest Ownership Associations, 25614 NBI-CLE 84, 95 (2005). When the SHA failed to move the resident, the department claimed that “allergies and asthma constitute a disability and that the resident was entitled to a different apartment as a ‘reasonable accommodation.’” By comparison, unit owners in a condominium community could not be required to swap units. Id. Therefore, will a reasonable accommodation require “physical modifications to the common elements to prevent smoke from traveling between units (if that is even possible)” or will it require a drastic step such as entirely prohibiting smoking in the smoker’s unit? Id.

The Possibility of Nonsmoking Condominiums
Although landlords can refuse to rent to smokers or can segregate apartment complexes into smoking or nonsmoking, condominium associations do not share the same luxuries because of the ownership rights vested in condominium residents. One state, however, has taken steps to encourage condominiums to adopt smoking restrictions. Utah’s Condominium Ownership Act expressly authorizes condominium association bylaws to provide restrictions regarding the use of the units, which “may include other prohibitions on, or allowance of, smoking tobacco products.” Ezra, “Get Your Ashes Out,” supra, at 138–39 (citing Utah Code Ann. § 57-8-16(7)(b)). Utah also implemented a law that says residential smoking conduct can amount to a nuisance. Ezra, “Get Your Ashes Out,” supra, at 139 (citing Utah Code Ann. § 78-38-1(3)–(4)).
Although most states have not passed specific laws concerning smoking in residential settings, many states have adopted “Clean Indoor Air Acts” that restrict people from smoking in all enclosed indoor workplaces. See Deborah S. Crumbley & Gregory A. Hearing, Where They Smoke, They May Get Fired: An Overview of Significant Workplace Smoking Issues, 68 Fla. B.J. 108 (Oct. 1994); see also H.B. 359—Clean Indoor Air Act of 2007: The Economic Matters Committee—Maryland House of Delegates, www.marypirg.org/advocacy/testimony/archive/testimony-archive/hb-359—
clean-indoor-air-act-of-2007 (last visited Jan. 8, 2008) (approximately 1,000 cities and 17 states such as California, Delaware, Connecticut, Maine, Massachusetts, Florida, New York, New Jersey, Rhode Island, Montana, Vermont, Washington, and Oregon, among others, have taken action to protect their citizens by enacting Clean Indoor Air Acts, which ban smoking inside of all workplaces, including bars and restaurants).
Because they apply to indoor workplaces, Clean Indoor Air Acts are likely to prohibit smoking during all indoor meetings of the condominium board of administration, committees of the board, and meetings of the membership because “work” is being performed. The simple cleaning or maintenance of an enclosed common area of a condominium is sufficient to impose a ban on smoking within these areas as well. Smoking in one’s own condominium unit is not included under the Clean Indoor Air Acts because one’s home is not an enclosed indoor workplace. Nonetheless, condominium associations may be able to restrict smoking in condominium units through their governing documents.
A condominium association may pass many kinds of rules to promote the “health, happiness, and peace of mind of the majority of the unit owners since they are living in such close proximity.” Grassmick, supra, at 203, quoting Hidden Harbour Estates, Inc. v. Norman, 309 So. 2d 180, 182 (Fla. Dist. Ct. App. 1975). In turn, “each unit owner must give up a certain degree of freedom of choice which he might otherwise enjoy in separate, privately owned property.” Norman, 309 So. 2d at 182. It follows that if condominium residents wish to live only with other residents of a similar age or desire not to have pets in their community, the same restrictions may be adopted to permit nonsmokers to live only among other nonsmokers.
Many courts across the county have adopted two different standards of review for evaluating the validity of condominium use restrictions in the governing documents. If the use restriction is contained in the original declaration prepared by the developer, then it is considered an initial developer restriction. For example, according to a Florida court in Hidden Harbour Estates, Inc. v. Basso, initial developer restrictions are “clothed with a very strong presumption of validity which arises from the fact that each individual unit owner purchases his unit knowing of and accepting the restrictions to be imposed.” 393 So. 2d 637, 639 (Fla. Dist. Ct. App. 1981). The court compared these restrictions with covenants running with the land and declared that they “will not be invalidated absent a showing that they are wholly arbitrary in their application, in violation of public policy, or that they abrogate some fundamental constitutional right.” Id.; see also Restatement (Third) of Property—Servitudes § 3.1 cmt. d (2000). Moreover, the court stated that “a use restriction in a declaration of condominium may have a certain degree of unreasonableness to it, and yet withstand attack in the courts.” 393 So. 2d at 640.
By contrast, subsequent restrictions are rules later imposed by an association board through an amendment to the bylaws. Courts will apply the reasonableness test to these subsequent restrictions “to limit the discretion of boards of directors to ensure that they only ‘enact rules and make decisions that are reasonably related to the promotion of the health, happiness, and peace of mind of the unit owners.’” See Carl B. Kress, Comment, Beyond Nahrstedt: Reviewing Restrictions Governing Life in a Property Owner Association, 42 UCLA L. Rev. 837, 861 (1995) (quoting Basso, 393 So. 2d at 640); see also Restatement § 6.7 (2000). According to the Basso court, when a board has discretion to permit or bar a particular use or behavior, “the board must allow the use unless the use is demonstrably antagonistic to the legitimate objectives of the condominium association, i.e., the health, happiness and peace of mind of the individual owners.” Basso, 393 So. 2d at 640; see also Restatement
§ 6.7 cmt. e (2000).
Applying these standards to a smoking restriction in condominium units, it appears that a smoking ban may have a greater chance of being upheld as an initial developer restriction than as a subsequent restriction because even unreasonable initial restrictions have a strong presumption of validity. When unit owners buy the condominium, they are fully aware of the rules and regulations. Smoking is not a fundamental constitutional right (even though most smokers will try to argue that it is), and a smoking restriction would not be a violation of public policy because, with all the smoking restrictions in the United States today, public policy is weighted more heavily on the side of less forced exposure to harmful ETS. Finally, with the many neighbor versus neighbor disputes that have erupted over the past decade, it is clear that the problem needs to be addressed. Therefore, as long as the smoking restriction was not selectively enforced, it would not be wholly arbitrary in its application.
As a subsequent restriction, a smoking ban may be slightly more difficult to enforce because smokers are already residents of the condominium community and have previously enjoyed the freedom to smoke in their units. With the known addictiveness of nicotine, requiring smokers to immediately quit smoking in their units might be considered an unreasonable restriction. The restriction could be considered reasonable if the association implemented a “grandparent” provision, in which current smokers could continue to smoke, so long as their smoking did not interfere with other residents, but all new residents would be subject to the rule prohibiting smoking. In Winston Towers 200 Ass’n v. Saverio, a pet restriction that had a retroactive effect was considered invalid based on the discriminatory effect. 360 So. 2d 470 (Fla. Dist. Ct. App. 1978). In Wilshire Condominium Ass’n v. Kohlbrand, however, a restriction against the replacement of dogs was “reasonably consistent with principles that promote the health, happiness and peace of mind of unit owners living in close proximity.” 368 So. 2d 629, 630 (Fla. Dist. Ct. App. 1979); see also Restatement § 6.7, illus. 13. Just as a grandparent provision could make a pet restriction valid, a straightforward rule prohibiting all future residents from smoking in their units may be upheld as reasonable.
According to a Florida court in Hidden Harbour Estates, Inc. v. Norman, “the association is not at liberty to adopt arbitrary or capricious rules bearing no relationship to the health, happiness, and enjoyment of life of the various unit owners,” and “[i]t is not necessary that conduct be so offensive as to constitute a nuisance in order to justify regulation thereof.” 309 So. 2d 180, 182 (Fla. Dist. Ct. App. 1975). Therefore, even if secondhand smoke were not held to be a nuisance under state law, the proven dangers associated with exposure to ETS would dictate that a smoking ban has a strong relationship to the “health, happiness, and enjoyment of life of the various unit owners.” Although smokers may feel their happiness and enjoyment has decreased based on the rule, the health of nonsmokers outweighs the desires of smokers. As the Surgeon General concluded in its 1986 report: “The right of smokers to smoke ends where their behavior affects the health and well-being of others; furthermore, it is the smokers’ responsibility to ensure that they do not expose nonsmokers to the potential harmful effects of tobacco smoke.” Ezra, “Get Your Ashes Out,” supra, at 147.
A smoking ban may ultimately be considered a reasonable restriction. Still, to remain valid, the rule must be consistently enforced. Not only may it be difficult to prove that odors or fumes are emanating from a specific condominium, but selective enforcement may expose the condominium association to serious claims and/or lawsuits based on breach of fiduciary duty. Residents could further claim that the failure to enforce a smoking provision creates serious health risks because of the harmful consequences from secondhand smoke. Therefore, before adopting such an easily violated restriction, condominium boards must be committed to undertaking the responsibility of enforcement.
Although the above analysis of the review standards only provides speculation on how courts may rule regarding a no-smoking restriction in condominium units, one court has upheld an amendment to a condominium association’s declaration that banned smoking within the boundaries of its four multilevel condominium units. Christiansen v. Heritage Hills 1 Condo. Owners Ass’n, No. 06-CV-1256 (Colo. Dist. Ct., filed Nov. 7, 2006); see also Restatement § 6.10. The lawsuit began when unit owners, Coleen Christiansen (now Sauve) and Roger Sauve, filed a complaint against the association requesting that the court find the no-smoking amendment void as an unreasonable restriction on their property interests.
Christiansen, the owner of Unit 2, which shared common walls with Units 1 and 3, was a smoker and lived in her condominium with her husband, who was also a smoker. Since 2001, Christiansen had received complaints from multiple neighbors concerning the smell of cigarette smoke from her unit. Although Christiansen had worked with her neighbors to alleviate the problem, such as having insulation blown into the wall between Units 2 and 3, participating in a scent test, adding filters, and allowing contractors into her unit to seal gaps and pipes with foam, the complaints regarding the smoke continued.
In November 2005, when Christiansen and her husband abruptly left a condominium owners meeting after a heated exchange erupted over the smoke infiltration issue, the remaining members sought the advice of an attorney to amend the covenants and pass a no-smoking provision. On December 30, 2005, Christiansen received by hand-delivery a draft of the no-smoking amendment with a ballot, but, on January 3, 2006, the amendment was passed with a 75% approval vote and recorded before Christiansen had returned her ballot. Finally, Christiansen and Sauve filed a lawsuit against the association after they received a letter from the association stating that they were in violation of the no-smoking amendment.
The court determined that an amendment to a condominium association’s declaration that is passed with the requisite approval vote and recordation should be upheld if it is reasonable, made in good faith, and not arbitrary and capricious. First, the court considered whether the seepage of secondhand smoke or its smell constituted a nuisance, which was specifically prohibited in the Declaration. See also Restatement § 6.10 cmt. d (2000). Although the Declaration did not define the term nuisance, the court identified it as (1) “that activity which arises from unreasonable, unwarranted or unlawful use by a person of his own property, working obstruction or injury to right of another, or to the public, and producing such material annoyance, inconvenience and discomfort that will presume resulting damage” or (2) “that which annoys and disturbs one in possession of his property, rendering its ordinary use or occupation physically uncomfortable to him; e.g. smoke, odors, noise, or vibration.” Christiansen, No. 06-CV-1256. Because testimony substantiated an almost constant smell of cigarette smoke from Unit 2, which was the source of complaint from multiple neighbors, the court concluded that the smoke smell constituted a nuisance under these circumstances. Therefore, the court held that the remedy of banning all smoking in the condominium units was done reasonably and in good faith.
Second, the court addressed whether the decision to make the units smoke free was undertaken in an arbitrary and capricious manner. After testimony showed that individual unit owners spent thousands of dollars in unsuccessful attempts to stop the smoke infiltration and Christiansen and Sauve rebuffed the proposal of smoking outside their unit, the court determined that the “smoking ban was reasonably investigated, drafted and passed by three out of four owners after years of trying to address the problem by other means.” Id. Therefore, the court held that “there can be no finding that the passage was arbitrary or capricious or done in bad faith.” Id.
Finally, the court considered whether the smoking ban violated any public policy or fundamental rights of any of the owners. In light of Colorado laws designed to protect nonsmokers from environmental tobacco smoke in indoor areas and the legislature’s “wishes to limit any unwarranted intrusion into private spheres of conduct and choice,” the court determined that the smoking ban did not violate any public policy. Id. The court noted that the protections of the Fourteenth Amendment do not include a fundamental right to smoke.
Ultimately, the court found for the association and upheld the passage of the no-smoking amendment to the Declaration because the use restriction was “proper, reasonable, made in good faith and not arbitrary and capricious.” Id. It is uncertain whether condominium associations across the country will take notice of this ruling and begin enacting no-smoking restrictions in their own condominium units. But one thing is certain: condominium associations now have one case as precedent to argue on their behalf.
Conclusion
It is clear that the battle between smokers and nonsmokers has reached the home front. Conflicts are inevitable given the close quarters that typify condominium living and the fact that smokers believe that they have a right to smoke in their own homes while nonsmokers believe that they have a right not to be exposed to harmful ETS. For many years, smokers have enjoyed the freedom of “lighting up” wherever and whenever they wanted; however, the times are changing quickly. Regulations on smoking are everywhere—in restaurants, in hotels, at sporting and cultural events, in the workplace, and even in the sky. Is now the time for no-smoking laws to continue in the home domain?
Condominiums are a distinct type of community with the ability to enact restrictions based on the personality and identity of a majority of the unit owners and thus represent an ideal arena for no-smoking bans in the home. A Florida Court of Appeal said it best: “Every man may justly consider his home his castle and himself as the king thereof; nonetheless his sovereign fiat to use his property as he pleases must yield, at least in degree, where ownership is in common or cooperation with others.” Sterling Village Condo., Inc. v. Breitenbach, 251 So. 2d 685, 688 (Fla. Dist. Ct. App. 1971). Still, only time will tell whether nonsmokers eventually reign over the kingdom.