Landlord Needn't Repair Fire Damaged Building

(Decision submitted by Jeffrey Turkel of the Manhattan law firm of Rosenberg & Estis, attorneys for the landlord.) Facts: A fire destroyed the apartments in a building containing a mixture of cooperative, rent-stabilized, and free market rental units. Tenants sued the holders of unsold shares, the cooperative corporation, the bank that held the building mortgage, and HPD to force repair of the building. Landlord claimed it wasn't feasible to restore the building because it would cost $4.5 million to do so and the value of the building would be between $1 million and $2 million. Tenants claimed this didn't matter. Landlord had reduced the amount of the building insurance from $3 million to $2 million before the fire. The court ruled for tenants and ordered landlord to restore the building to a ''safe and habitable condition.'' Landlord appealed. Court: Landlord wins. Landlord's reduced insurance coverage and tenants' possible legal claims against landlord didn't give the court the authority to compel restoration of the building. It wasn't landlord's fault that the fire happened or that repair of the building was impractical. The co-op and rent-stabilized tenants may be entitled to compensation under proprietary lease terms and rent regulations, but it was up to landlord to decide whether it was more economical to repair the building or to pay tenants any compensation it may owe them.

Bernard v. Scharf: NYLJ, p. 25, col. 3 (7/2/98) (App. Div. 1 Dept.; Sullivan, JP, Rosenberger, Wallach, Rubin, Tom, JJ)