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To Disclose Or Not To Disclose

That is the question.  I’m talking bedbugs, not Shakespeare.  As you may know, last August in an effort to ameliorate the anxiety of New Yorkers confronted by bedbug epidemics in their buildings, a law was passed requiring disclosure of bedbug infestation history.

Does that mean before you plunk down that wad of cash you have to be told whether the co-op or condo you’re buying into has been invaded?  At least some co-ops seem to think so and have recently begun including such disclosure as part of their sales and sublease applications. But is that what they should be doing?

On its face, the law applies only to rentals, That means, at least in theory, the landlord has to tell you before you enter into a lease whether there has been a bedbug invasion during the prior year in any apartment or the common areas of the building so you can run away before you sign.  Sounds good, but the cynic in me has to believe that landlords (with the help of creative counsel) will find ways to circumvent such damaging disclosure just like lots of restaurants have avoided posting Health Department Grades of less than A, by tying up any unfavorable decision in lengthy appeals.

Now some co-ops are starting to include bedbug disclosure forms in their sales and sublease applications. Is this required?  Does it make sense?

By its terms, the law applies only to rentals, and no court to date has extended it to co-ops. A number of laws passed to benefit renters have by judicial decision been extended to co-ops including, The Pet Law, The Roommate Law, and The Warranty of Habitability The rationale is that like renters owners of co-ops are also tenants under their proprietary lease with the co-op (through its board) acting as landlord.

Since you own your apartment outright in a condo, you’re your own landlord so you wouldn’t get the protection of any laws originally intended to protect renters, such as the bedbug disclosure requirement.  But if you rent out your apartment your tenant might get such protection because then there is a landlord/tenant relationship.

Until some court decides definitively, co-ops can only guess what to do.  Some are erring on the side of disclosure, at least where it’s good news and there are no bedbug infestations to report.

So who is supposed to do the disclosing? In rentals, the answer is clear because the landlord owns the entire building and has access to every apartment.  But in co-ops, apartments belong to individual shareholders so the co-op powers that be may not know what’s going on in a particular apartment unless they are told.  That’s why, for example, The Pet Law requires that residents’ dogs be open and notoriously harbored for at least three months before knowledge is imputed to management.  For now most managing agents don’t want to be on the hook for saying something they haven’t verified so they require selling shareholders to sign off on the bedbug disclosure.

But that makes no sense, and arguably is not in compliance with the law.  The predicate for application of the disclosure law would be the landlord/tenant relationship existing between shareholder/tenant and co-op (through its board and by extension its managing. agent). No such relationship exists between selling shareholder and buyer. Moreover the law specifically states that disclosure be made by the managing agent or the owner, which in this context generally has been defined to mean the building owner, not the individual shareholder.

Plus there is no penalty under the law for non-disclosure, but there could conceivably be liability for misrepresentation.  Say the disclosure form states there have been no bedbug infestations for the past year and it turns out the purchaser finds a family of them when he moves in.  Now that’s a potential lawsuit in the making.

That’s why, all things considered, maybe for now it’s best that co-ops do nothing   Silence sometimes really is golden.


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