Don't Forget to Read Those Condominium Documents

A young attorney once asked me a question about a lease she was reviewing where the building was condominiumized. Before I responded, I had one question for her: "Did you review the condominium documents?" She looked at me with a blank look. That was not a good answer. I explained that the condominium "declaration" and the by-laws, floor plans and rules and regulations attached to it (all referred to, many times, in the lease as the "condominium documents") should be a starting point for any lease review where a condominium "unit" or "units" comprise all, or part of the premises leased by a tenant. To obtain a copy of the condominium documents an attorney can request them from the landlord who owns the unit or, as is the case in New York City, the documents may be found online if you know the block and lot number of the building. Reviewing the condominium documents may provide information about the actual unit you are leasing that you cannot glean from a review of only the lease itself. That means that, no matter how carefully you reviewed the lease, if you don't read the condominium documents you could be missing critical information relating to the unit and the building that is available only by reviewing the condominium documents.

Condo Units

Every condominium consists of a certain number of "units." It is important to review the condominium declaration to see that the unit that is described in the lease is the same as the condo unit mentioned in the declaration. For example, if you are leasing a commercial unit within the building and the declaration states that the space you are leasing consists of units C1 and C2, make sure that these unit numbers are specifically described in the lease as the space you are leasing. Besides giving an accurate description of the space you are leasing; the unit numbers are also important to mention in any lease where the tenant is responsible for all or a portion of the taxes that are due for the premises as each unit is separately taxed by the taxing authorities. A description of the unit in the declaration may also provide the square footage contained within the unit and, in the case of a garage unit, may also mention the number of parking spaces available within the unit. If a garage lease requires the tenant/garage operator to provide parking for no less than 50 spaces but the unit only allows for 48 spaces this could be a problem. Similarly, if the declaration provides that there is approximately 21,250 square feet of retail space but the lease states that the Premises has a smaller footprint, again, that is something that may require further review. The declaration should also mention the uses that are permitted within the unit, and, just as importantly, the uses that are prohibited. Carefully review the declaration to check that the use you intend to lease the space for matches what is contained in the declaration and that any use that is "permitted" under the lease is not prohibited in the condominium documents. You could be surprised as to what you find!

Common Elements

The definition of "common elements" varies from declaration to declaration. Generally, common elements consist of the entire property, including the land, and all parts of the building and improvements within the condo, other than the units themselves, as well as all personal property and fixtures existing in, on, or under the property for the common use of the units or by two, or more, unit owners or which is necessary for the maintenance, management, operation, or safety of the property. In addition, there may be limited common elements. Limited common elements are certain common elements that are for the benefit of only the residential or commercial units. Residential and commercial limited common elements can include, among other things, certain roof terrace areas, media rooms, fitness rooms, residential lobbies, public corridors, stairways, mechanical rooms, and exterior spaces accessible only to residential or commercial unit owners. In is important to know what portion of the building you can use and not use. When reviewing the repair provisions of a lease, it is also important to realize that areas outside of your unit may not be the landlord's responsibility to maintain and are instead the responsibility of the condo to repair. At a minimum, make sure that your lease states that, no matter what the condominium documents say, the landlord will make commercially reasonable efforts to cause the condominium to perform any repairs or make any alterations to the common elements required under the condominium documents. Depending on your bargaining power, a tenant may also insist on stepping into the shoes of the landlord to bring a suit directly against the condo board or requiring the landlord to bring a suit against the condo to defend the tenant's rights under the lease. It is also important to be aware that the condo board and the unit owners may have easements to access the condo units and common areas to maintain and repair them. This information is, often, only available in the condominium documents.