Alteration agreements are among the most important documents boards review. They protect the building from liability, ensure work is done properly, and preserve the integrity of shared building systems. Yet many board members are unsure what to look for or what questions to ask. This guide covers the essentials.
What Is an Alteration Agreement?
An alteration agreement is a contract between the building (co-op corporation or condo association) and a unit owner who wishes to make changes to their apartment. It establishes the rules, requirements, and protections that govern the renovation work. In most co-ops, no alterations may be made without board approval and a signed alteration agreement. Condos typically have similar requirements in their bylaws. The agreement protects both the building and the owner by clarifying scope, responsibilities, and consequences.
Key Components of an Alteration Agreement
Scope of work — A detailed description of what the owner is proposing. This should be specific enough that both parties understand exactly what is approved.
Plans and permits — Requirement for architectural drawings and, where necessary, DOB permits. The agreement should specify that work cannot begin until required permits are obtained.
Insurance requirements — Owners must typically provide proof of adequate insurance: general liability (often $1–2 million), workers compensation, and the building named as additional insured.
Contractor approval — Board approval of the contractor, including verification of licensing and insurance.
Work rules — Hours of work, elevator usage, debris removal, and other building-specific requirements.
Indemnification — The owner agrees to hold the building harmless from any claims arising from the work.
Restoration obligations — If anything goes wrong, the owner is responsible for restoring affected areas to original condition.
Security deposit — A refundable deposit to cover potential damage to common areas.
Inspection rights — The building's right to inspect work in progress and upon completion.
Common Issues Boards Should Watch For
Structural changes — Any work affecting building structure (removing walls, adding bathrooms, combining apartments) generally requires engineer sign-off.
Plumbing and electrical — Work on risers or main lines affects other units. Ensure qualified contractors and proper permits.
HVAC modifications — Changes to heating or cooling can affect building systems and other units.
Waterproofing — Bathroom and kitchen renovations should include proper waterproofing to prevent leaks.
Noise and vibration — Require measures to minimize disruption during construction.
The Review Process
A typical alteration review process: the owner submits an application with plans and contractor information; the managing agent reviews for completeness; the building's architect or engineer reviews plans for significant work; the board reviews and approves, denies, or requests modifications; the alteration agreement is executed; insurance certificates and deposits are received; work commences after permits are obtained; the building conducts inspections during and after work; and final sign-off and deposit return complete the process.
When to Involve Professionals
Not every alteration needs professional review, but consider involving your building's architect or engineer for: any structural modifications, plumbing or electrical work beyond simple fixture replacement, bathroom or kitchen gut renovations, work that might affect adjacent units, and HVAC modifications. The cost of professional review is typically passed to the owner. This investment reduces the risk of damage and disputes.
Post-Completion
Do not forget: conduct a final inspection, obtain DOB sign-offs if permits were required, update building records with the modifications, return the security deposit (minus any deductions for damage), and keep a copy of the agreement in the building's permanent files. Proper closure protects the building and provides a clear record for future sales and alterations.
Insurance and Deposits During Work
Require proof of insurance before work begins and track expiration dates; if the contractor's policy lapses mid-job, work should stop until it is renewed. The security deposit should be held in a building or escrow account and returned only after final inspection and resolution of any damage. Document any deductions with photos and repair invoices.
Working with Management
Your property manager should coordinate the alteration process, including tracking insurance expirations, monitoring work progress, and ensuring compliance with agreement terms. If you are unsure about any alteration request, ask for management's recommendation before the board makes a decision. A consistent, documented process protects the building and supports fair treatment of all owners. Well-run alteration programs reduce risk and keep renovation activity manageable for the entire building.