Landlord Must Make Building Habitable After Fire

Facts: A six-story, 60-apartment, cooperative building was severely damaged by fire and made uninhabitable in 1994. Tenants sued landlord/co-op sponsor to compel restoration of the building to a habitable condition. The co-op offering plan required landlord to insure the building for the full replacement cost of $3 million, but landlord had replaced the insurance policy with a $2 million, 80 percent co-insurance policy in 1991. He didn't report this to the co-op board until after doing so. Landlord claimed it was economically infeasible to restore the building. The court ruled for tenants and landlord appealed. Court: Landlord loses. Landlord owned a majority of the co-op shares in the building and was required to restore the building under the Housing Maintenance Code since it was ``salvageable.'' As for landlord's claim of economic infeasibility, landlord hadn't shown that the market value of the restored building wouldn't equal the difference between the cost of restoration and the cost of demolition. And landlord hadn't shown that, once restored, the building wouldn't generate enough income to recover his costs in a reasonable time. There was also no unconstitutional taking of landlord's property in ordering landlord to restore the building.

Bernard v. Scharf: NYLJ, p. 25, col. 1 (1/14/97) (App. T. 1 Dept.; McCooe, JP, Freedman, Davis, JJ)