The “licensing” scheme at this condominium is a fraud that rips everyone off solely to benefit former dominant board member Defendant One.
All rights to shaft space are bylaw defined. The effect of it on the abandoned freight elevator shaft in the building, is to divide it evenly among everyone.
This fraud is an ongoing crime, rectifiable on an ongoing basis, by any or all unit owners.
Since 2007, the board encouraged shaft build ins, even repeatedly promising that these build ins would be done for all in common. The Offer did the exact opposite. The condominium attorney—and now, sadly, others in the New York City real estate bar, for whom such schemes only manufacture transactional and dispute fees—wrongly thinks that Cohen v. Perry St. Board is about a condo board “selling” common element space “to” unit owners. The case does nothing of the kind. The Perry St. unit owner who wanted to enclose a small piece of adjacent hall into his unit made a donation to grease a board approval. This was on his initiative, not the board’s. A harmless bribe given for approval. The Perry St. board “sold” nothing. It merely took cash given to it. In no way does this imply that a fiduciary board can turn around and, on its initiative, forcibly “sell” a common element to unit owners, at a declared entity “profit,” discriminatory among unit owners. That is extortion. Condominiums are based on cost. Not profit.
I believe this is an instance of rising enterprise corruption in New York, given a sad assist by judicial abdication to a class of overprivileged board malfeasors who now find it all too easy to evade accountability—and which echoes the move toward corporatized fascism which the late Obama administration famously viewed as more of a feature than a bug, basing its experimentation on recent anti-libertarian legal-academic trends. This experiment in delegation to corporate entities by the state is not going well anywhere in America—including in the sexual harassment kangaroo courts lately instituted at contemporary American campuses.
Fair market value (sale or rental) is merely a valuation. It is not a “sale.” Real estate is valued when a board, pursuant to its duty to the common interest, acts within its power. It had no such power here.
In this situation the condominium board simply has no power to “sell real estate.” Fair market valuation in pursuit of a common purpose is all the board—which is a manager, not an owner—has any authority to do.
This licensing scheme sought to sell board approvals. This is inherently corrupt. No common purpose was served by it. Defendant One merely served himself—to everyone else’s money and property, abusing board power and common funds to steal others’ property by fabricating a faux appearance of legality in a flurry of private contracts. A condominium “profit” motive adverse to unit owners, selling to them, is on its face a conflict of interest.
When you look at this closely, it is all unethical, illegal, and worst of all, economically irrational.
Everyone but he was charged four times their cost to build in while he got to pay his cost. Everyone was forced to subsidize him.
By grouping shaft with roof under a “price” list, the Offer deceitfully implied that the roof was part of the shaft. It is not. To use the common roof, Defendant One must pay fair market value rent. On the roof, everyone else is being deprived of that valuable, highly limited, common roof real estate. No one is deprived of anything if a unit owner uses their part of the shaft.
Defendant One never got proper permission for any of his roof constructions. All are illegal. To be legal, the documents must be followed and they were not. Every owner affected by a change in a common element must approve.
The Offer fraudulently recharacterized roof rentals as “common interest share monthly payments” to use “the shaft.” To do this, the Offer made everyone in the building liable to pay a monthly charge to use the shaft—all so that Defendant One could pretend that his taking of the roof was part of the shaft. The only relevant building precedent for shaft use inside the building is no charge. (Defendant One’s use of it since 1997).
Comically, Defendant One also gets his common interest share of “profit” from these monthly “common interest share shaft” payments, and the fake “sales” gouged out of everyone in the building except him.
When the Offer was first sent out, Defendants Three and One were already building in the shaft and on the roof. They had broken into our loft from there, three weeks before the Offer arrived on all doorsteps.
In charging everyone new “common interest shares” for the shaft, common interest shares have changed. This violates RPL §339-m.
Under §2.2 or its §2.2.3 limited residual powers, there was no board power to lease a common element. These clauses align with Bylaw §6.15.4 which grants the sole prerogative to initiate an enclosure of an adjacent common element to the unit owner specified in that bylaw as eligible to do so. It does not grant such prerogative to the board. Defendant Three is not eligible under the bylaw terms. Nor is Defendant One. They are not adjacent to the space and their units are not appurtenant to it. Only ours is.
The term-shuffling alone in this “licensing” scheme—swapping out “selling,” “leasing,” or “licensing” at will—was a large clue of a fraud afoot.
Board resolutions range here from nonexistent to inadequate. Nearly everything done here is ultra vires. The records show slovenliness, confusion, and autocracy gone haywire. Highly conflicted board members did not recuse, only madly self-dealt in bad faith.
Worse, the “Offer” was pitched to owners as a condominium profit venture. There is no common interest in profiting off unit owners. The term confused the personal interest in generating profit of Defendant Two, the former King of the Building—who, as an employee of the condominium’s management company had a conflict of interest in performing his King of the Building role—with the condominium’s interest in good management. Profits are worse than irrelevant here. Condominiums are based on cost. “Profit” is only a tax liability. If, as advertised, this is profit, then the last 7 years of tax returns, not only the condominium’s, but everyone’s, must be amended to report profit distributions. To put “profits” into a capital account, as Defendant Two announced that the condominium would do, without reporting those profits as such, is accounting fraud, at both entity and owner levels. For which owners are all now liable to the tax authorities. Fees (which are profits) only serve a common purpose if a board determines, pursuant to orderly investigation, report, and clear board resolution, that a common need exists to, for example, allocate demand to regulate garage parking space rentals that are highly sought after.
The only one ever “profiting” here was Defendant One. Everyone else was charged quadruple their cost, to subsidize the very high cost of valuable benefits that flowed only to Defendant One.
The Offer pretended to be some kind of notice. But receipt of a deceitful sales pitch does not constitute notice or approval of, much less a vote for, anything.
All of Defendant One’s roof units are illegal. Private contracts do not supplant the documents. Private contracts do not substitute for a required process of due consideration, resolution, or vote. The extreme non-transparency of a process of private contracts accessible only to board members, in itself presents serious questions as to any legal legitimacy.
Perniciously, people felt forced to comply and to “buy” their own shaft spaces, out of fear of losing it, or of being tied up in expensive legal knots. This invested them in the scam. But they should never have been so compelled.
The condominium must now be put on the correct capital cost footing, the shaft and roof separated, and all so-called “licenses” revoked.
Historically, Defendant One cheated the building repeatedly via Defendant Two, who worked at Andrews. For example, Andrews once announced the condominium would pay half of Defendant One’s leak damages from a toilet of his that overflowed. Why would the condominium’s insurer share this cost? Citing no evidence, Andrews said original sponsor Zuberry was to blame because other toilets in the building were believed to be defective, too. This was false, certainly with respect to Defendant One. Defendant One took his loft totally raw. He never had any toilets from Zuberry, so Zuberry was not to blame. (We have four Zuberry toilets, none with any leak issues.) This is not the only example. At the first fractious special board meeting regarding the shaft, Defendant Two told me that the condominium’s insurance had paid half for another Defendant One leak, caused by his having opened the roof to build another roof unit. He explained that this was because the rain had come into the building through a part of the roof that was common. What? The location where rain enters is irrelevant. Who caused it is what matters.
What may have happened here was, Defendant Two was contracting for Defendant One, Defendant One blamed him, so Andrews covered for Defendant Two by allowing him lie to the condominium’s insurer so that they would not be blamed, and so notified all unit owners. Defendant Two also appears to have charged expensive cladding to Defendant One’s secretly installed third roof unit to the condominium. This needs to be investigated.
Defendant Two has made everyone pay Defendant One’s personal costs here for years. Now he engages in maliciously racking up expensive and utterly unnecessary fees from a large architecture firm, his crony, which he bills to us, with no rule or contract authority to do so. We are being harassed as retaliation for our whistle-blowing. We have been put to great personal expense and trouble to expose the frauds ongoing here.
In any contract, each party pays their own respective costs to negotiate it.
Past board members often behaved as if profiting the condominium entity at owner expense was their duty—as if a condominium board were inherently adverse to owners. At least one board member was deceived into supporting the scheme by being tricked into thinking she’d receive a personal financial benefit out of it.
Have you been charged bills unfairly? We’d like to hear about it and correct any abuse.
Under condominium rules, any bad rule can be stricken by majority unit owner vote. No rules have been promulgated since 2005.
To force overreaching contract boilerplate on people is inappropriate.
Condominium rules need to be reviewed. They appear to be mostly reactive. Forbidding anything bad that has ever occurred in the building from ever happening again, in rule form, which is simply silly. Just state basic principles so they are correct, and flexible.
The condominium should not be commandeering individual responsibilities. The basic condominium rule is to distinguish common from individual costs.
“Licensing” in fact, here, is a lawyer fee racket. Reversion to and compliance with the documents is the best and simplest course and far cheaper and better in the long run for everyone.
Democracy and transparency should be enforced all year. An annual unit owner meeting is a good thing, if only to connect once a year with one’s neighbors. But in this day and age of electronic communication it is inadequate. Most or all board meetings should be open and announced with final board minutes regularly circulated. This has been asked for since 1997. But never done.
Better fiscal responsibility is needed here. Common bills may not be charged willy nilly to individual owners not responsible for them. Cost responsibilities are only as agreed, or as rules reasonably provide. Those responsible for bills must monitor them. Do not engineer third party payer problems.