The New York City Council had a very ambitious legislative agenda in 2017, and the New York State Legislature weighed in as well. This column highlights several important laws enacted in 2017 which impact co-ops and/or condominiums, and the steps that boards and managers should take in order to comply with the same.

Disclosing Potential Conflicts of Interest

Effective Jan. 1, 2018, the Business Corporation Law (BCL) was amended to add a new section requiring all co-ops to provide annual reports to their shareholders/apartment owners disclosing any contracts made by the board on behalf of the building in which one or more board members are “Interested.” Generally, a board member is “Interested” when he or she is a party to (or is a director or officer of an entity that is a party to) or has a “substantial financial interest” in the contract. See BCL §713; see also Talel, “Conflicts of Interest—A Broker on the Board,” N.Y.L.J. (July 5, 2017, pg. 3, col. 1). The required report must: describe the contract; identify the party with which/whom it was made; state the amount and purpose of the contract; disclose the record of board meetings regarding the contract, and how each director voted regarding entering into the same; and state the date until which such contract “would be and remain valid.”

Therefore, boards and managers should be vigilant in identifying “Interested” directors (by requiring disclosure of such interest pursuant to the building's bylaws), and ensuring that the BCL §713 required report is prepared and timely provided to shareholders/apartment owners.

Required Adoption and Disclosure of a Smoking Policy

Enacted in August 2017 and effective August 2018, Local Law 147 (LL147) requires that every residential building, expressly including co-op and condominium buildings, establish a written policy which states where in the building (and in all adjacent outdoor areas, common courtyards, rooftops, balconies and patios) smoking is permitted or prohibited. The policy must be provided to all tenants/apartment owners and publically displayed in the building. See 2017 LL147, §17-506. LL147 also requires that apartment owners incorporate the building's smoking policy into any agreement they make to rent or sell an apartment, and boards must incorporate the policy into the building's bylaws or rules. Importantly, LL147 does not prohibit smoking within apartments, nor does it require that any specific prohibitions be included in a building's smoking policy. See generally Siegler and Talel, “New York City Requires Adoption of a Smoking Policy,” N.Y.L.J. (Nov. 1, 2017, pg. 3, col. 1).

Further, Local Law 141 of 2017 (LL141), effective Feb. 24, 2018, expands the mandate of the Smoke Free Air Act (which, among other things, prohibits smoking in common areas of multiple dwellings) to dwellings containing fewer than 10 units. LL141 also prohibits the use of electronic cigarettes in the common areas of all multiple dwellings, including co-op and condominium buildings. LL141, §17-505.

Boards should therefore ensure that the required smoking policy is adopted and managers should ensure that: the statutorily required disclosures of the policy are made and displayed; the board adopted policy be incorporated into the building's bylaws/rules; and that apartment owner's leases and sale contracts disclose such policy before a board approves such a lease or waives its right of first refusal, as applicable.

After-Hours Construction—Noise Mitigation

Starting in 2020, Local Law 53 of 2018 (LL53) lowers the permitted decibel limits for after-hours construction in residential areas to 75 decibels or 7 decibels above the ambient noise, and authorizes the New York City Department of Environmental Protection (DEP) to issue a stop work order if such limits are exceeded. LL53, §24-223(d). “After hours” is defined by §24-223(a) as being “before 7 a.m. or after 6 p.m. on weekdays and/or on Saturday's and/or Sundays.”

Boards and Managers should be mindful of these new noise limitations when imposing work rules on contractors performing building work and on apartment owner's contractors performing apartment alterations.

Mold Assessment and Remediation

Signed into law on Jan. 8, 2018 and effective on Jan. 1, 2019, Local Law 61 (LL61) establishes the requirements for persons who may assess, remediate and abate mold covering areas larger than 10 sq. ft., pursuant to Article 32 of the New York State Labor Law (the NYS Labor Law)—such work may only be performed by a licensed third party. LL61, §24-154(b)(1).

This appears to conflict with and nullify a parallel provision in the NYS Labor Law, which exempts “an owner or a managing agent or a full-time employee of an owner or managing agent who performs mold assessment, remediation, or abatement” from the State's licensing regime. See NYS Labor Law §993(3).

Therefore, unless LL61 is amended or successfully challenged in the courts before its Jan. 1, 2019 Effective Date, boards and managers will not be able to utilize building employees (without regard to such employee's training, experience and meeting the substantive provisions of LL61's licensing requirements) from performing mold remediation work covering areas of more than 10 square feet—only a licensed third-party may do so. This may impose a substantial economic burden on buildings and deprives buildings and their apartment owners of the benefit of having such work performed by persons with the knowledge and institutional memory of the building and its systems—building employees likely have and third-parties do not.

Conclusion

The foregoing laws impose responsibilities on boards and managers, which are detailed above and should be complied with. Numerous additional laws were also adopted by The City Council in 2017, including laws relating to: bedbug infestation reporting; energy efficiency and sustainability; required gas piping inspections; required allergen inspections; and construction safety. See Legistar.council.nyc.gov/Legislation.aspx. Managers should become familiar with these laws, their effective dates and determine, with the assistance of the building's professionals when necessary, how to best ensure any required compliance.

Eva Talel is a partner at Stroock & Stroock & Lavan and an adjunct professor at New York Law School. Sunny Velez, Policy Analyst at the Real Estate Board of New York, Margaret Jones, a research librarian at Stroock, and Therese Puccio-Nadolski, a legal assistant at Stroock, assisted in the preparation of this column. Stroock is counsel to the Real Estate Board of New York.