Co-ops & Condos:
Complete FISP Compliance Guide

1. Who Is Responsible: Board vs. Individual Owners

In a co-op, the corporation owns the building and is legally responsible for FISP compliance. The board of directors acts on behalf of the corporation and bears the duty to ensure facade inspections are completed, reports are filed with DOB, and any required repairs are carried out within the mandated timeline.

In a condo, the situation is slightly different. The condo association is responsible for common elements, which include the building's exterior walls. Individual unit owners own their apartments outright but typically have no direct FISP obligation. The condo board manages compliance through the association, funded by common charges.

Board members should understand that FISP liability sits with the entity, not with them personally, provided they act in good faith and within their fiduciary duties. However, a board that knowingly ignores facade obligations could face derivative lawsuits from shareholders or unit owners.

2. How Assessments Work for FISP Costs

Facade inspection and repair is one of the largest capital expenditures a co-op or condo faces. The inspection itself typically costs $5,000 to $25,000 depending on building size, but repairs can run from $100,000 to well over $1 million for buildings with significant deterioration.

Boards have several options to fund FISP work:

• Reserve fund: If the building has maintained a healthy capital reserve, it can draw from this. Most financial advisors recommend keeping 10-15% of annual operating costs in reserve.
• Special assessment: A one-time charge to shareholders/unit owners, proportional to their share allocation or percentage of common interest. This is the most common approach for large FISP projects.
• Maintenance increase: A permanent or temporary increase in monthly maintenance/common charges to build up funds over time. Less disruptive but slower.
• Financing: The co-op or condo can take out a building loan (often called an "underlying mortgage" addition). This spreads the cost over years but adds interest expense.

3. The Board's Legal Obligations

The board has a fiduciary duty to maintain the building in safe condition. Under FISP, this means:

• Hiring a Qualified Exterior Wall Inspector (QEWI) to perform the inspection within the building's sub-cycle window
• Filing the inspection report with DOB before the deadline
• If classified SWARMP or UNSAFE, executing repairs within the required timeframe
• If UNSAFE, installing a sidewalk shed immediately to protect pedestrians
• Maintaining records of all inspections, filings, and repair work

Failure to comply exposes the corporation or association to DOB penalties, potential lawsuits from injured parties, and claims from shareholders or unit owners who suffer financial harm (e.g., difficulty selling due to unresolved violations).

4. Typical Timeline for Co-op Decision-Making

Co-op and condo boards should plan well ahead of their FISP deadline. Here is a realistic timeline:

• 24-30 months before deadline: Begin discussing FISP at board meetings. Review the previous cycle's report. Contact QEWIs for proposals.
• 18-24 months before: Select a QEWI and schedule the inspection. Begin budgeting for potential repairs. If the prior cycle was SWARMP or UNSAFE, assume repairs will be needed again.
• 12-18 months before: Complete the inspection. Receive the QEWI's preliminary findings. If repairs are needed, begin soliciting contractor bids.
• 6-12 months before: Select a contractor. If an assessment is needed, present it to shareholders/unit owners at a meeting. File the FISP report with DOB.
• Filing deadline: Report must be submitted. If repairs are required, the repair timeline begins.

5. Getting Shareholder Buy-In

One of the biggest challenges co-op boards face is convincing shareholders to approve a large assessment for facade work. Unlike a lobby renovation or roof replacement, facade repairs are not always visible to residents, making it a harder sell. Here are strategies that work:

• Educate early: Share DOB penalty information at annual meetings. Show what non-compliance costs versus proactive repair.
• Show comparables: Share data from similar buildings in your neighborhood. MyBuildingSafe lets you look up any building's status and penalties.
• Offer payment plans: If the assessment is large, allow shareholders to pay over 12-24 months rather than in a lump sum.
• Get multiple bids: Showing that the board sourced competitive pricing builds trust and demonstrates fiscal responsibility.
• Frame it as equity protection: Unresolved FISP violations appear in due diligence when units are sold. They depress sale prices and can derail closings.

6. Insurance Implications

FISP status directly affects your building's insurance. An UNSAFE classification can trigger policy reviews, premium increases, or even non-renewal. Insurance carriers increasingly check DOB records during underwriting.

Key insurance considerations:

• Your building's general liability policy should cover facade-related incidents, but carriers may exclude coverage if the board knew about unsafe conditions and failed to act.
• Directors and Officers (D&O) insurance protects board members from personal liability, but only if they acted in good faith. Knowingly ignoring FISP obligations could void this protection.
• During active facade repairs, the contractor must carry their own insurance (general liability, workers' comp), and the building should be named as an additional insured.
• Sidewalk sheds require their own liability coverage. Your contractor should provide a certificate of insurance covering the shed installation and maintenance period.

7. Special Considerations for Landmarked Co-ops

If your co-op or condo is in a historic district or is individually landmarked by the Landmarks Preservation Commission (LPC), facade repairs add a layer of complexity and cost.

Landmarked buildings often face higher repair costs because they must use historically appropriate materials and methods. Standard Portland cement mortar may not be acceptable; lime-based mortar matching the original may be required. Similarly, replacement brick, terra cotta, or stone must match the original in color, texture, and dimensions.

Budget 20-40% more for facade repairs on a landmarked building compared to a similar non-landmarked structure. The good news: well-maintained landmarked buildings command premium prices, so the investment protects property values.

8. Cost-Sharing Between Units

In a co-op, costs are typically shared based on share allocation. A unit with 1,000 shares in a building with 100,000 total shares pays 1% of the assessment. This is usually straightforward and defined in the proprietary lease.

In a condo, costs are shared based on common interest percentages as defined in the offering plan. However, complications can arise when facade damage is localized -- for example, if only one side of the building needs major repair. Some condo bylaws allow the board to allocate costs to the units most directly affected, while others require equal sharing. Review your governing documents carefully.

Ground-floor commercial units in mixed-use co-ops and condos can create disputes. Commercial units may argue they should pay less for upper-facade repairs that don't affect their storefronts. The governing documents usually settle this, but if they're silent, the board should seek legal counsel before setting assessment terms.

9. Managing Agent vs. Board: Who Handles What

Most co-ops and condos hire a managing agent to handle day-to-day operations. For FISP compliance, the division of responsibility is typically:

• Managing agent handles: Tracking FISP deadlines, soliciting QEWI proposals, coordinating building access for inspections, managing contractor logistics, processing payments, maintaining compliance records.
• Board handles: Approving the QEWI selection, reviewing inspection findings, approving the repair scope and budget, approving contractor selection, authorizing assessments or financing, communicating with shareholders/unit owners.

The key is that the board retains decision-making authority while the managing agent executes. A good managing agent will proactively alert the board when FISP deadlines are approaching and provide organized bid packages. However, the board should never assume the managing agent is tracking this -- always confirm directly.

10. Common Mistakes Co-op Boards Make

After working with hundreds of NYC co-ops and condos, these are the most frequent FISP mistakes we see:

1. Waiting too long to start: The single most common mistake. Boards delay until 6 months before the deadline, then scramble to find a QEWI and contractor at inflated prices.
2. Choosing the cheapest QEWI: A thorough inspection now prevents expensive surprises later. The cheapest inspector may miss conditions that a more experienced one would catch early.
3. Not budgeting for repairs: Getting the inspection done is only half the battle. If the report comes back SWARMP or UNSAFE, you need funds for repairs. Plan for both scenarios.
4. Ignoring SWARMP: A SWARMP classification means repairs are needed. Some boards treat it as a "passing grade" and ignore the repair requirement, leading to penalties and escalating damage.
5. Poor communication with shareholders: Surprise assessments breed resentment and potential legal challenges. Communicate early and often about FISP planning.
6. Not verifying contractor DOB filings: The contractor should file all necessary permits and completion reports with DOB. Boards should independently verify these filings were made.
7. Losing track of sub-cycle deadlines: FISP operates on a 5-year cycle divided into sub-cycles. Missing your sub-cycle deadline triggers immediate penalties.
8. Failing to maintain records: Keep copies of all inspection reports, contractor agreements, DOB filings, and correspondence. These are essential for future cycles and any legal proceedings.