You’ve worked a lot for this and now, at last, you’re in the finishing stages of closing on your new co-op or condo apartment. But if you were hoping to get started on any renovations before the sale closes you’re in for a disappointment.

What is an alteration agreement?

Shared buildings such as co-ops and condos require what’s called an alteration agreement before any work can begin. It’s understandable that you’d like to start work immediately but it’s highly unusual and almost impossible to get a board to agree on renovations before the sale has closed.

Why would that be? Because you’re not a shareholder (co-op) or owner (condo), not yet anyway. Making nonstandard requests like this could jeopardize your board interview. Also, any drastic changes to a unit could cause problems for other tenants.

The alteration agreement allows the board to review your planned renovations and put certain restrictions on when, how and what you can do. Once the sale is closed you can arrange a meeting with the board members and building managers to negotiate the terms of the agreement and the renovations themselves.

What goes into an alteration agreement?

Most buildings in NYC have a generic alteration agreement that has already been prepared by their attorney. This can be edited as needed for each individual project though, of course, the board would have to approve such changes. Every alterations agreement should, at a minimum, include the following.

  • Indemnification – the person performing the alteration agrees to indemnify the building and its shareholders/owners from any claims that may arise from the alteration.
  • Security deposit – a deposit will need to be made to the board to cover any potential problems that require the services of an architect or engineer. The deposit ensures that the resident can pay back the charge for this immediately.
  • Certificate of insurance (COI)– there will be an insurance coverage minimum that any contractors hired for the project will need to cover. How high this will be varies depending on the building and the size of the project.
  • Working hours – there must be considerations for the other tenants so there will be restrictions on when work can be done. A good benchmark would be limiting noisy work from 10 am to 4:30 pm, non-noisy work from 8:30 am to 5:00 pm and on weekends only.
  • Time Limit – if work is expected to carry on for at least six months that’s not fair on the other residents. Most agreements limit construction time to 120 calendar days with high charges for each day you exceed the limit. You may be able to ask for an extension but it will have to first pass board approval.
  • Right to Stop – if the board has reason to suspect that something may be amiss they will have the right to stop the work at any time without incurring any liability.
  • Gas Line No-touch Policy – for a gas line to be moved it has to be shut off and go through a pressure test before it can be put back on. If a leak is found it must be kept shut down until it is found and repaired, impacting on every other resident. As such, expect the agreement to have a gas line no-touch policy.
  • ‘Wet over Dry’ Renovations – expect to see a probation on moving or expanding wet areas like bathrooms and kitchens over dry areas like bedrooms or living rooms.
  • Future maintenance and repair obligations – both the resident and any future owners must be liable for any repairs or maintenance if necessary.
  • Guidelines on hazardous material removal – there will be guidelines stating how any hazardous materials such as lead paint and asbestos is to be removed.
  • Conformance to plans – the finished project must match the approved plans and blueprints.

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