During our recent continuing legal education course, Real Estate Business Ethics, held on October 24, 2012, I was asked by an attorney/student whether they could ethically share office space with a real estate brokerage office.

The answer is yes according to the New York County Lawyers' Association Committee on Professional Ethics in Opinion Number 733.

Although the answer is yes, the Committee cautioned as follows in rendering its Opinion: "Joint office sharing arrangements with non-Designated Professionals, while historically permitted, should be entered or continued only when precautions such as sub-dividing space and separating communications are undertaken, and these precautions will be particularly important whenever reciprocal referrals are also contemplated". 

The committee also offered the following suggestions: "If there is a common reception area, the signage and office nomenclature must not create the impression to the public that the lawyer and non-lawyer have a professional relationship. If there is one receptionist the same proscription applies. Existing space can be subdivided such that access to file rooms and computers containing confidential files is restricted."

Lastly, it must be notated that the Opinion is not binding on the Courts in enforcing the ethical rules and furthermore, the opinion referenced to the Lawyers Code of Professional Responsibility, which was replaced by the New York Rules of Professional Conduct on April 1, 2009 and therefore is not dispositive. Nonetheless, it appears that similar rules exist under the new Rules of Professional Conduct and that the Opinion's guidance remains applicable. The practitioner is advised to seek out a new opinion from their local Ethics Committee, pursuant to the new rules, before acting.

No said the Appellate Court (1st Dept.) in Granirer v. Bakery, Inc.

In its decision, the Court said that there is an "abatement of their maintenance until the apartment is restored to a habitable condition". Further, the Court stated that there should be a 100% abatement of maintenance, which includes "their contribution to the cooperative's tax and mortgage obligations".

The Appellate Court quoted its prior decision in Suarez v. Rivercross Tenants' Corp for the proposition that "A proprietary lessee is entitled to the statutory protection [of the warranty of habitability] as well as the noninvesting, ordinary tenant".

The Warranty of Habitability is a statutory right embodied in Real Property Law section 235-b that is required in every lease in New York. It provides that the property shall be "fit for human habitation and for the uses reasonably intended by the parties and that the occupants of such premises shall not be subjected to any conditions which would be dangerous, hazardous or detrimental to their life, health or safety".

So, is an act of god, such as a hurricane, an exception to the Warranty of Habitability? No, said the City Court of Yonkers, Westchester County, when faced with this question in Spatz v. Axelrod Management Co., Inc.

Nonetheless, it must be notated that a Co-op shareholder's (unit owner's) refusal to pay their maintenance will likely result in the Co-op becoming insolvent and eventually being foreclosed upon and the shareholder's proprietary lease thereby being rendered void. So, in the end, shareholders refusal to pay maintenance based upon a breach of the proprietary lease's implied Warranty of Habitability is actually attacking them-self.

Its important for a shareholder who is considering not paying their maintenance to first review their proprietary lease and also consult with an attorney before acting and refusing to pay.

Click here for the government's website to assist those in need of help and resources.