Published: February 24, 2002
Q I am a new shareholder in a Mitchell-Lama co-op. Is it as important for me to take out a homeowners insurance policy as it would be for the owner of a market-rate co-op. E. Stern, Manhattan.
A ''The answer is very definitely yes,'' said Ezra N. Goodman, a Manhattan lawyer who specializes in Mitchell-Lama co-ops.
Mr. Goodman said that whether a co-op is a Mitchell-Lama co-op has no bearing on the importance of homeowners insurance. ''In fact,'' he said, ''some Mitchell-Lama co-ops, just like some market-rate co-ops, are considering making it mandatory for shareholders to obtain homeowners insurance.''
Mr. Goodman said that there are two reasons for co-op shareholders to have homeowners insurance. The first, he said, is to cover damage to the apartment caused by a third party.
''Take the classic case of the shareholder upstairs allowing the sink to overflow,'' Mr. Goodman said. ''In most cases, if there is structural damage to the apartment, the co-op's insurance carrier will cover that. But if there is damage to the interior of the apartment -- things like furnishings, floors and wall coverings -- the shareholder is going to be responsible.''
And while the shareholder can always sue the upstairs neighbor for the cost of the necessary repairs, Mr. Goodman said, it is generally faster and easier to file a claim with an insurance carrier and then let the carrier take action against the neighbor.
The second reason for having homeowner's insurance, he said, is that the insurance typically provides liability coverage.
''That means that if you have a guest who trips and falls in your apartment and sues you, you can look to your homeowners insurance policy to provide coverage,'' he said.
In most cases,
Mr. Goodman said, homeowners insurance for co-op apartments is relatively inexpensive.
''The cost is going to depend on the amount of coverage,'' he said. ''But I'd say that if the premium reaches $500 a year, that would be at the high end.''
Co-op Staff Working For Shareholders
Q Our co-op allows our maintenance staff to do paid personal work for shareholders -- things like painting, etc. -- during the hours they are working as paid co-op employees. Is this right and/or legal. Dennis Ferguson, Manhattan.
A Arthur I. Weinstein, a Manhattan lawyer who is vice president of the Council of New York Cooperatives and Condominiums, said that while it is neither wrong nor illegal for a co-op board to provide certain defined services to all shareholders that the co-op would otherwise not be required to provide under the proprietary lease, it generally would not be appropriate for the co-op to permit building employees to devote their normal workday time to projects for individual shareholders on a paid basis.
In other words, Mr. Weinstein said, if the co-op was permitting its paid employees to repair faucet leaks for shareholders -- something the shareholders themselves would typically be responsible for -- there would be nothing wrong with that as long as the services were being provided to all shareholders on a uniform basis.
At the same time, he said, if the maintenance staff is spending time performing private paid work for shareholders during normal working hours, their performance for the co-op as a whole would suffer. And while it would not be illegal for a co-op board to permit its staff to do private work while on co-op time, to do so would probably not be in the best interests of the co-op.