The Do’s and Don’ts of Alteration Agreements

Rosie Powers

No one likes it when a neighbor has an ongoing renovation project that lasts for months on end, especially when the renovations may cause damage to your own apartment. Luckily, most buildings have a mechanism in place to fix this: the alteration agreement.

Starting the Process
When shareholders approach the prospect of a large-scale renovation, they should be prepared to meet with board members and building managers to negotiate the terms of the renovation as well as the plans themselves. If it’s major, the shareholders would consult with an architect or engineer first to draw up plans, then the plans and specifications become guidelines for what needs to be done. Then the plans are reviewed by the board, which may have their own architect or engineer make sure the plans don’t compromise anything in the building.
Once plans are presented to a board, usually a contract called an alteration agreement is signed between the management company and/or the board and the shareholder. Alteration agreements are contracts between the shareholder and the building in which the shareholder is promising to do everything according to the law and code, and that building will not be damaged by the renovation. The shareholder cannot begin work without approval.

The Agreement Itself
Because alterations can be common among co-ops and condos, many buildings have a generic alteration agreement already in place. Usually the board will have a general alteration agreement already prepared by their attorney, which will have a start and end date for projects and hours. If someone is renovating a house, people will not care how long it takes, but if it is an apartment and the alteration takes six months, it is not fair to the neighbors.
However, as most alterations are not exactly the same, the board or management company and the shareholder can work within the parameters of the alteration agreement to include minor details that apply to the renovation. There is no legal requirement that the building and resident must draft an alteration agreement, but the building that does not consider it is being very short-sighted and is playing with fire. When residents share a common roof, all the units are intertwined.

Playing By the Rules
Once a time limit is set by an alteration agreement, it is expected that the project follows as close as possible to the timeline set out in the agreement. However, if a project runs longer than expected, shareholders can apply for an extension of the agreement. The board can consider this extension, but is not required to say yes. This creates a situation for the board where they are setting policy and precedent that any future extension in the same circumstances must be granted.
Courts have also been very hard on boards – once they perform an alteration agreement, they are stuck with the terms of that agreement. Further, the legal constraints for a homeowner’s board are greater in a co-op lease. The typical co-op lease says that a board cannot “unreasonably withhold or delay” its approval of an alteration agreement by application of a shareholder.
A common reason that boards reject co-op and condo alterations is for “wet over dry” construction. For example, the construction of a bathroom or kitchen over a living room or non-plumbing area. Wet construction increases the risk of water damage to neighboring apartments. Most co-ops will agree to the combining of two apartments as it is a value added alteration and raises the profile of the building.
To ensure that there is not damage done to neighboring apartments during construction, some boards require the alteration shareholder to pay a deposit prior to construction to account for any damage that may occur during the renovation. The deposit can also serve as a reminder of the time limit on a project, and can be revoked if the terms of the alteration agreement are broken by the shareholder.
It is very important for neighbors to document their apartment condition prior to their neighbor’s construction. A pre-construction survey is very important; some buildings do not pay enough attention to carrying out the alteration agreement.

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