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Perspectives

Cooperative Shareholder Awarded Complete Abatement of Rent Due to Leaks, Mold, Water Damage

A recent court decision granted a tenant-shareholder in a Cooperative a full abatement of maintenance payments based upon extensive leaks, mold, and damage to her apartment and personal property. However, the abatement did not apply during time periods in which the tenant-shareholder refused the Cooperative access to the apartment for purposes of maintenance and repairs.  De Socio v. 136 East 56th Street Owners, Inc., 2018 N.Y. Misc. LEXIS 5345, 2018 NY Slip Op. 51623(U) (Civil Ct. N.Y. Co. Oct. 5, 2018).

The evidence at trial established more than ten years of leaks and mold damage to the apartment. Water began infiltrating the apartment in 2005, and leaks from sources including the ceiling, terrace, and HVAC system continued until 2016.  The leaks caused damage to the apartment’s floors, appliances, and furniture as well as personal property.  Repairs were attempted in 2007, but did not resolve the problems.  The tenant-shareholder vacated the apartment and stopped making maintenance payments.  In 2009 and 2010, the Cooperative presented the tenant-shareholder with a proposal for reconstructing the apartment, but no work was performed because the tenant-shareholder did not allow access to make the repairs.  In 2016, the tenant-shareholder authorized access and the work was performed, after which the apartment was listed for sale.

The court found that “[t]he credible evidence at trial demonstrates profound damage to the Apartment rendering it materially uninhabitable from the time that the leaks began in 2005 to April 2016, when the [Cooperative] completed the necessary repairs.” Therefore, the Cooperative breached the implied warranty of habitability, which forms a part of any lease of residential property in New York, including a proprietary lease, and “implies a covenant that the premises rented and all common areas are fit for human habitation and for the uses reasonably intended by the parties, and free from conditions dangerous to life, safety, or health.”

The court ruled that these facts justified an abatement of rent. In determining the amount of the abatement, the court observed that “[t]he proper measure for damages of a breach of warranty of habitability is the difference between the fair market value of the premises in fully habitable condition, as measured by the rent reserved under the lease, and the value of the premises during the period of the breach. . . .  [T]he finder of fact must weigh the severity and duration of the breach, as well as the effectiveness of steps taken by the landlord to abate [the] conditions.”  Here, after reviewing the evidence presented at trial, the court held that the leaks, property damage, and mold conditions “required a significant overhaul of the Apartment.”  Thus, the tenant-shareholder was awarded a full (100%) abatement for the first two years of the period in dispute.

The Cooperative argued that it had made good-faith efforts to inspect and repair the apartment, but was precluded from doing so by the tenant-shareholder’s denial of access. The proprietary lease authorized the Cooperative’s personnel to enter the apartment at any reasonable time of day, upon notice to the tenant-shareholder or without notice in case of emergency, to make or effectuate such repairs.  Nonetheless, for several years the tenant-shareholder denied the Cooperative the access it needed to make repairs.  When the work was ultimately authorized and completed in 2016, “the repairs which plaintiff allowed were nearly identical to those which she would not allow for several years.”  Therefore, no abatement was granted for the period from mid-2009 until 2013.  For the period 2013 to 2016, the court held that the Cooperative shared responsibility for the lack of progress, because by that time it should have brought a legal proceeding to compel access, and granted a 50% abatement.

The court refused to award the tenant-shareholder any other damages. Money damages beyond abatement of the rent – such as loss of value of property, personal injury, or pain and suffering – could not be awarded for a breach of the warranty of habitability.  Punitive damages were denied because the Cooperative had not acted intentionally or maliciously.  A claim for breach of the covenant of quiet enjoyment was dismissed because the lease made payment of rent a condition precedent to this covenant.  Finally, with respect to both parties’ claims for attorneys’ fees and litigation expenses under the proprietary lease, the case had a “mixed outcome” so that neither side was a “prevailing party” entitled to attorneys’ fees.