First, we will examine this situation assuming that the roof deck amenity is to be shared by all residents of the cooperative. A qualified attorney should review the cooperative’s governing documents to determine whether the Board of Directors or all shareholders are required to approve this project. If a building-wide assessment needs to be implemented to fund the project, the governing documents may also advise your attorney whether a Board resolution or a vote of the shareholders at an annual or special shareholders meeting is required to authorize the assessment.
Next, let’s consider another situation, where the roof deck amenity is to be used exclusively by only one shareholder, usually the resident on the top floor. The shareholder has agreed to buy this common area space, thus enhancing the cooperative’s coffers. Prior to the project, the roof is common space owned by the cooperative. For any particular shareholder to purchase this space, shares of stock need to be allocated to the space. Unissued stock is called treasury stock. Hopefully, the cooperative at issue has not already issued all of its stock. A specialized real estate broker needs to determine that the number of shares to be issued to this area bear a reasonable relationship to the proportion of shares already issued for apartments in the building. For instance, the broker will consider that 100 shares are issued for apartment 5A with 1,000 square feet and likewise for other apartments. From that data, the broker will determine how many shares should be issued for the roof deck and the resulting purchase price. Also, the cooperative attorney will need to obtain a “no-action letter’ from the Attorney General of the State of New York authorizing that a certain number of shares be issued for the space and that the cooperative is legally authorized to sell it to the shareholder.
Once the roof deck is under construction, whether for use exclusively or non-exclusively, other issues should be addressed. Compliance with safety and municipal laws needs to be considered. Perhaps the municipality forbids grilling activities, even if desirable for summer parties. If a grill is permitted, access to fire extinguishers and emergency egress are musts. Fall protection in order to prevent injury or death is another requirement.
Maintenance is also of concern. In order to prevent water leaking and resulting damage, the roof deck must be constructed with the proper materials, so that leakage is minimized and the weight bearing loads anticipated can be accomplished. If the roof deck is to be used exclusively by one shareholder, such shareholder must be obligated to provide access to drains and flashing at penetration points in order to properly maintain the roof and prevent resulting water damage. Should the shareholder fail to abide by maintenance obligations, he will be responsible for any damage to the apartments below as caused by a leak. Since it is desirable to have a lovely garden on the roof, it is important to consult with professionals to confirm that the roof will not be damaged by the weight from garden planters.
Adequate insurance is also necessary. If the roof deck is to be a common amenity, the cooperative building needs to procure its own insurance, covering property damage and personal injury. Should the roof deck be used exclusively by a shareholder, proof that adequate insurance is maintained for these issues is also necessary.
We are available to consult with you for your roof deck project, so that “the world below [won’t] bother [you]” when the “stars put on a show for free.”