Frisch v. Bellmarc Management, Inc.
1993 N.Y. App. Div. LEXIS 5096, 190 A.D.2d 383, 597 N.Y.S.2d 962 (1993)
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Rule of Law:
New York's statutory warranty of habitability, Real Property Law § 235-b, does not apply to the relationship between a condominium unit owner and the condominium's board of managers because condominium ownership is a form of fee ownership, not a leasehold interest that creates a landlord-tenant relationship.
Facts:
- In March 1986, plaintiff Frisch purchased Unit 6B at the Cooper Square Condominium.
- Frisch did not reside in the unit, instead leasing it to residential tenants.
- In the fall of 1988, Frisch notified the defendant Board of Managers that his tenant was experiencing water leaks, a problem also reported by other unit owners.
- The Board hired engineers and undertook substantial repairs, including replacing the main roof, which abated but did not completely resolve the water intrusion issues.
- The condominium's by-laws stipulated that maintenance and repairs to a unit and its exclusive common elements, such as terraces, were the sole responsibility of the unit owner.
- Beginning in or around November 1988, Frisch withheld payment of his common charges and assessments to the Board.
Procedural Posture:
- Plaintiff Frisch commenced an action in the Supreme Court, New York County (a trial-level court), against the defendant Board of Managers and others.
- The Board of Managers answered and asserted a counterclaim seeking payment of arrears in common charges and assessments.
- The Board of Managers moved for partial summary judgment on its counterclaim.
- The trial court denied the Board's motion, holding that the statutory warranty of habitability applied to the relationship between the unit owner and the Board, and ordered a hearing to determine if the warranty was breached.
- The defendant Board of Managers, as appellant, appealed the trial court's denial of its motion for partial summary judgment to the appellate court.
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Issue:
Does New York's statutory warranty of habitability, Real Property Law § 235-b, apply to the relationship between a condominium unit owner and the condominium's board of managers, allowing the owner to withhold common charges due to alleged defects?
Opinions:
Majority - Ross, J.
No. The statutory warranty of habitability does not apply because condominium ownership is a form of fee ownership, not a leasehold interest creating a landlord-tenant relationship. The court distinguished condominium ownership, which is fee simple ownership of real property under the Condominium Act, from cooperative ownership, which involves a proprietary lease and creates a landlord-tenant relationship where the warranty does apply. By its plain language, Real Property Law § 235-b governs lease or rental agreements, which do not exist between a unit owner and a board of managers. Therefore, a unit owner cannot withhold common charges based on a breach of this warranty; their remedies against the board are instead governed by the condominium's by-laws and the business judgment rule. Furthermore, the court noted that even if the warranty applied, Frisch, as a non-resident owner, could not invoke its protections, which are intended for occupants.
Analysis:
This decision creates a bright-line rule distinguishing the legal status of condominium owners from cooperative shareholders in New York regarding the warranty of habitability. It reinforces that the relationship between a condo owner and the board is corporate and contractual, governed by by-laws and the business judgment rule, not landlord-tenant law. This strengthens the power of condominium boards to collect common charges and assessments, as it eliminates a significant defense for unit owners seeking to withhold payment due to maintenance disputes. Consequently, aggrieved unit owners must challenge board actions based on breaches of fiduciary duty or violations of by-laws rather than on habitability grounds.
