Landlord Must Repair Fire-Damaged Building

LVT Number: 10024

Facts: Tenants sued landlord to obtain repairs of building severely damaged by fire. Landlord was the holder of unsold shares of building which was converted to cooperative ownership. There were 43 rent-stabilized apartments and 17 cooperative units. The top floor of the six-story building collapsed into the fifth floor during the fire. The rest of the building was water damaged. The building became uninhabitable.

Facts: Tenants sued landlord to obtain repairs of building severely damaged by fire. Landlord was the holder of unsold shares of building which was converted to cooperative ownership. There were 43 rent-stabilized apartments and 17 cooperative units. The top floor of the six-story building collapsed into the fifth floor during the fire. The rest of the building was water damaged. The building became uninhabitable. Landlord claimed 1) it was economically infeasible to repair the building; 2) since restoration would cost more than half the market value of the building, the building must be considered destroyed; and 3) to force landlord to restore the building would be an unconstitutional taking of property in violation of the Fifth and Fourteenth amendments. Court: Landlord loses. Landlord claimed it would cost $2 million to $5 million to repair the building but showed no proof of how much it would cost to destroy the remaining structure and pay for the relocation of tenants and for any liability to cooperative owners. So landlord didn't prove it was economically infeasible to make repairs. Landlord also underinsured the building in violation of the cooperative offering plan. The so-called ``marine rule,'' which prevented a forced restoration when it would cost more than half a ship or commercial building's market value, didn't apply to a residential building. And there was no constitutional violation. Landlord's financial loss, if any, was caused by underinsuring the building. Landlord made incorrect comparisons to cases where the court found an unconstitutional taking of property because other landlords were required to operate an existing building as an SRO or continue to lease rent-stabilized apartments to an institutional tenant indefinitely. Landlord was ordered to restore the building to habitable condition within eight months.

Bernard v. Scharf: NYLJ, p. 28, col. 3 (9/8/95) (Civ. Ct. NY; Wendt, J)