Case Notes in

2025

First published: Aug 2025
Single Me Out? Not So Fast

TAKEAWAY Here, the court recognized that individual board members should not be subjected to litigation simply for serving on a board. To hold board members personally liable, plaintiffs must allege with specificity that they committed wrongful, fraudulent, or tortious acts beyond their role as board members. The Business Judgment Rule protects board members from liability when they exercise business judgment within their authority. This protection can warrant dismissal of lawsuits at the pleading stage, even when all allegations in the complaint are accepted as true for purposes of the motion. Being named as a defendant in a lawsuit imposes significant burdens on individual board members. Underlying decisions such as this is the (often unstated) recognition that absent such judicial protections……no one will want or desire to serve on a cooperative or condominium board.

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First published: Jul 2025
The Big ‘Don’t’

TAKEAWAY Once again, the corporate documents rule and dictate the outcome. Don’t add conditions that are not set forth in the by-laws. Don’t disenfranchise your shareholder’s ability to vote for properly qualified candidates of their choosing. Don’t try to rely on the business judgment rule to justify non-compliance with the by-laws or the proprietary lease.

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First published: Jul 2025
Sick, Sore, Lame & Disabled

TAKEAWAY For boards who govern in buildings where third-party workers are performing services, there are three major concerns: liability, indemnity, and insurance. The first concern, liability exposure, arises because under current law it is presumed that a building owner is liable when workers fall from heights during construction or maintenance work, regardless of who actively caused the accident. Indemnity, the second concern, is in the form of a written contract term often found in the agreement permitting contractors to do work or employ workers in the premises. These contractual terms require the contractor to protect the owner against claims brought by injured workers. Essentially, the contractor agrees in writing to step in and defend the owner, covering legal costs and damages when workers seek compensation under laws like Labor Law § 240(1). This indemnity provision serves as the owner's first line of defense against worker injury claims. The third concern, insurance, is more problematic. Contractors typically provide an ACORD 25 Certificate of Insurance (COI), typically issued by the contractor’s insurance broker. These certificates appear to confirm adequate coverage, but they contain a critical flaw: they don't reveal policy exclusions and endorsements that could allow the insurance company to deny coverage. Even worse, the COI itself states that it cannot modify the actual insurance policy terms. The lesson for boards is clear: before allowing any work to begin, boards must go beyond the standard certificate of insurance. Either the board’s attorney or insurance broker must examine the actual insurance policy provided by the contractor. This review should verify that no exclusions or endorsements exist that would allow the insurer to disclaim coverage when protection is needed most. Only through this thorough policy review can boards ensure they have the protection they believe they've secured through their contracts.

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First published: Jun 2025
$9M on Ice While Flatiron Condo Fight Heats Up

TAKEAWAY Even before a hotly contested litigation is fully adjudicated, a court may effectively punish a defaulting sponsor by depriving it, for an extended time period, of substantial profits from a sale of one or more of its units. When an inequity or impropriety is suspected, it will also step in and protect a Board of Managers against an allegedly unscrupulous sponsor. To assure a positive result, counsel for a Board of Managers should carefully review the offering plan and relevant documents, and present cogent evidence of a sponsor’s wrongdoing before a trial is scheduled so that the court can direct appropriate, albeit punitive, relief. While a $500,000 undertaking may also seem daunting, it is a small price to pay compared to the risk that sponsors' assets will be prematurely transferred, and/or inaccessible to the condo, making any victory meaningless.

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First published: Jun 2025
Bin Battle at 521 Park Avenue

TAKEAWAY A storage bin (unless included in the definition of the unit) in a condominium is typically a common element. As such the unit owner using it has no proprietary right to it, and is granted the use of it only until the board takes it back. Rather than take a chance as to what a court might do, it is wise for any condominium board that allows a unit owner to use any common element to demand that a license agreement be signed by the unit owner. That document would set forth the rights and obligations of both parties. By doing so, the condominium can make it clear that it would have the right to terminate the use of the common element at any time. It should be noted that if a bin (or other property outside of the unit) is designated as a limited common element, the declaration and bylaws should be carefully reviewed as to the rights of the unit owner to use the property.

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First published: May 2025
It Snowballed with “Snowball”

TAKEAWAY The story took a significant turn when an appellate court stepped in and ruled that the co-op couldn't simply kick Zelmanovich out of her apartment without first allowing the court to properly examine the facts. The higher court said that before any eviction could proceed, there needed to be a real determination about two key questions: Was Snowball's barking actually as disruptive as the co-op claimed? And did the co-op illegally discriminate against Zelmanovich? This case highlights an important issue that co-op boards should consider: Is it appropriate to try to evict a longtime resident when, as appears to be the situation here, all the complaints are coming from just one neighbor? There's another troubling aspect to this story. When Zelmanovich told the co-op that Snowball was her emotional support animal — meaning she needed the dog as a reasonable accommodation animal — the co-op and Zelmanovich should have communicated in an attempt to come to some kind of compromise or accommodation. Instead, it seems like both sides dug in their heels without really trying to solve the problem. Now, four years after this whole ordeal began - what started as a simple complaint about a barking dog — the legal battle shows no signs of ending. A case that might have been resolved through communication and goodwill has instead turned into a prolonged court fight that continues to drag on.

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First published: May 2025
You Can’t “Slapp” Them Down

TAKEAWAY Most co-op and condo boards, management companies, and board attorneys are familiar with shareholders or unit owners who incessantly complain about everything to do with how the co-op or condo is being operated. Sometimes those complaints have merit; often, however, the complaints lack foundation or any sense of proportionality. In this case, it is clear that the sponsor and condo board believed that the couple (and especially the husband) had crossed the line from legitimate, fair, and productive criticism to toxic, antisocial, and indefensible behavior. However, what the plaintiffs failed to recognize in time is that in New York, when individuals criticize management about matters of public interest (a broad concept that encompasses co-op and condo affairs), litigation should not be used as a tool to silence those voices unless very stringent pleading and evidentiary requirements can be met from the outset.

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First published: May 2025
Whose Water Bills Are You Paying?

TAKEAWAY Boards should ensure strict compliance with bylaw provisions relating to sub-metering and billing practices, especially when commercial units are involved. Consider what typically happens: A board may assume that sub-meters are functioning properly, bills are allocated correctly, and that everyone understands their responsibilities. Then reality strikes. The commercial unit on the ground floor had been drawing extraordinary water usage for years without proper accounting, and the board came to the belated realization that the residential owners had been unwittingly subsidizing a business operation. Boards and managing agents should periodically walk the building, clipboard in hand, and verify that every required submeter isn't just installed but actually working. Additionally, any general releases that seem to resolve today's construction disputes could unexpectedly complicate tomorrow's billing disagreement, so it is a best practice to have those carefully reviewed by a professional to ensure clarity regarding future liabilities, and avoid unintended implications for unrelated or future claims.

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First published: May 2025
Doggie DNA

THE LESSON FOR BOARDS While rules and regulations can sometimes be used to curb certain behaviors, boards should be made aware that seeking judicial intervention to enforce them regulation may nevertheless be problematic. Here, the board’s adoption of the dog breed restriction created a presumption of viciousness while also creating a potentially irreconcilable conflict with applicable law. By not commencing an action within the statutory three-month period, the board was entirely dependent on its ability to demonstrate through evidence and testimony that the dog “caused damage to the premises, created a nuisance or interfered with the health, safety or welfare of other residents of the building.” In this case, the facts did not support such a determination.

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First published: Apr 2025
The Never-Ending Sponsor

TAKEAWAY The co-op found itself in trouble by mistakenly asserting that because the sponsor was “not an individual person which is a condition required to qualify as a Holder of Unsold Shares under the cooperative’s offering plan and . . . proprietary lease,” even though the offering plan did not actually require a holder to be an individual. It is unclear whether the co-op’s position was simply an error, or perhaps a calculated gamble to gain leverage over the sponsor and force it to sell apartments. Regardless, co-ops must be very careful in dealing with holders of unsold shares and understand that their proprietary leases likely provide for very different treatment than average tenant-shareholders. Attempting to charge a holder a flip tax will not only result in a loss in court, but will also require the board to pay the sponsor’s attorneys’ fees as well.

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