First published: Mar 2026
A Seven-Year (and Counting) Wait to Renovate
TAKEAWAY One common mistake many co-op boards make is believing they have unfettered control over shareholder alterations. That is not necessarily true. Boards must review the proprietary lease and follow its exact language. If the lease requires board consent but states that consent cannot be unreasonably withheld, the board must proceed carefully. In that situation, the board may not be protected by the business judgment rule. A court has the authority to review the board’s decision to determine whether the board acted reasonably based on the facts. If the court finds that the board acted unreasonably, it may determine that the board breached both the proprietary lease and its fiduciary duty. The consequences for a board that does not act properly can be serious.
ROSENTHAL v. PARK HILL TENANTS CORP
In 1999 Scott Rosenthal bought a co-op apartment at 1199 Park Ave. and purchased the neighboring unit in 2012 with the intention of combining them. To do so he needed a wide range of approvals from the Department of Buildings, the Landmarks Commission, the co-op’s architect and the board. The first approval came in 2013 from the DOB and two months later he submitted the renovation plans and a signed alteration agreement to the co-op’s management.
Over the next several years, the board required additional documentation and then demanded changes in the planned renovation. Rosenthal delivered what the board requested, including among other things, contractor insurance policies and amended plans. Seven years after signing the alteration agreement, the building’s management requested a DOB-approved second version of the plans. Rosenthal provided them and asked when the board would act so he could begin renovation. He was told that his application was behind other applications being reviewed and it would be treated as a “de novo” project - meaning it would be reviewed from scratch.
Rosenthal claimed the board improperly withheld consent and that every time he addressed an issue, another one would develop out of thin air. He brought an action against management and the board for breach of fiduciary duty, a declaratory judgment that the board had unreasonably withheld its consent and must expeditiously provide its consent, punitive damages, breach of the proprietary lease and attorneys’ fees.
IN COURT The co-op asked the court to dismiss the case, but it treated it as a motion for summary judgment.
The court first looked at the claims against the managing agent and dismissed them, ruling that the managing agent owes a fiduciary duty to the co-op corporation, not to individual shareholders. It also noted that the managing agent was not a party to the proprietary lease. For those reasons, the claims for breach of fiduciary duty and breach of lease against management were dismissed.
The claims against the board were treated differently. The board argued that its decision was protected by the business judgment rule. But the court declined to grant summary judgment. It pointed out that the proprietary lease did not give the board unlimited authority over alterations. Instead, the lease said the board could not unreasonably withhold its consent. Because the board did not explain why it withheld consent at various points—or why it requested documents in a piecemeal way that caused delays—the court found there were factual questions that must be decided at trial.
If the board’s actions are ultimately found to have been unreasonable, the shareholder may have valid claims against the board for breach of the proprietary lease and breach of fiduciary duty.
COUNSEL for Scott Rosenthal: LEON I. BEHAR, Leon I. Behar PC, EDWARD R. HALL, Balsamo, Rosenblatt & Hall; for Park Hill Tenants Corp. et al: ANGELA M. OBJAY-STENROOS, ARTHUR GREGORY TORKIVER, JOSEPH DIMITROV, Litchfield Cavo; Justice Paul A. Goetz
