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Get It in Writing

Letter of the law. When a shareholder wants to do alterations in their apartment, co-ops typically require that they sign an alteration agreement. Doing so ensures that the responsibility for any maintenance or repairs relating to the alterations becomes the shareholder’s responsibility. But if that shareholder sells her apartment, the future owner may not be aware of these alterations, or really any alterations made by previous owners. To ensure that buyers take responsibility for these, and all, alterations, purchasers should be required to sign an assumption agreement either before or during the closing.


Apartment sellers, however, aren’t likely to raise their hand and tell a buyer that they’re taking on an additional liability. It’s really on boards and their managing agents to ensure that an assumption agreement is signed every time a unit is sold so that all future owners, whether once, twice or thrice removed, agree to take responsibility for alterations done by every previous owner.


Paper trail. You need to keep track of these assumption agreements because if and when a problem arises, they will help distinguish who is responsible for the repair. Being meticulous with your documents is a must, which can be a challenge. Managing agents change over time, companies change, there are mergers of companies, and more often than not there are problems in the chain of record-keeping. If there’s a building leak and you’ve lost the signed assumption agreement, the proprietary lease often puts the responsibility for repairs on the board, which means you — and by extension your shareholders — will have to pay for it. 


When there’s going to be a closing, make sure that the assumption agreement is signed. Attorneys aren’t always involved in these closings, and don’t often review alteration agreements. But getting an assumption agreement signed needs to be on someone’s checklist. It really is something that can save a board and its shareholders thousands, if not millions, of dollars.

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