Case Notes
Case Notes provides insight on one particularly relevant co-op or condo case—clearly explaining what happened, why it’s important, and what lessons can be learned within.
Category
- Access
- Alterations
- Arbitration
- Assessment
- Attorney Fees
- Attorney-Client
- Authority to Sue
- Balcony/Terrace Rights
- Bike Lane
- Books and Records
- Breach of Lease
- Business Judgment Rule
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- Motion Practice
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- Notice of Pendency
- Nuisance
- Occupancy Agreement
- Ownership
- Parking
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- Personal Injury
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- Proprietary Lease
- Reasonableness
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First published: Sep 2019
Leon v HarlanThe reason this case is important is not because it breaks exciting new legal ground but because it is a common complaint in vertical living: other people make noise. Aside from preposterously obvious nuisances – no, you cannot practice your tap routine at 1A.M. – most courts will tell litigants that if you’re going to live in an apartment building, you have to expect noise from other people living there. Carpets and padding should be required, but will not ensure the silence of living in a one-story house. There is another lesson for shareholders here, though: let he who is without sin cast the first lawsuit. Despite the fact that the initial complaint was filed by Leon, Harlan’s counterclaims took over the proceedings. Be wary – sometimes, if you sue a neighbor, she may turn around and sue you right back.
Read full articleFirst published: Jul 2019
Segev v 262 N 9 LLCThe theory behind a condo board’s right of first refusal is that the seller, a unit-owner to whom the board owes a fiduciary duty, is in no different a position if the apartment is sold to the buyer or to the building. It is thus the buyer – with whom the building has no contractual relation-ship – who takes the risk that the building will purchase the apartment. However, the theory Segev advanced here – tortious interference with the contract by the board – has previously been rejected by the courts in the context of a co-op board’s rejection of a purchaser. The conclusion is that any contract to purchase a co-op or condo apartment is subject to the board’s rights under its respective governing documents. Accordingly, the prospective purchaser signs on to the rules of the building and is required to abide by them.
Read full articleFirst published: Mar 2019
345 East 50th Street LLC vs. The Board of Managers of M at Beekman CondominiumBoard members are permitted to – and should be permitted to – operate their buildings as they see fit. They do, however, have obligations to all unit-owners (or shareholders in a co-op), including one to make repairs to the envelope of the building when required. While the board members did not act improperly, the court noted that, when Brown’s application for the roof deck work was submitted, the board could have let her know that a roof replacement was being considered. While failing to notify her may have been irresponsible, it was not actionable. The lesson for unit-owners is that when they are about to perform renovations of the type discussed here, they may want to ask the board if it is considering repairs that would affect the renovation. Unit-owners may even want to read the board minutes. That may seem like an unnecessary burden, but it also is a simple enough way to avoid situations like this one.
Read full articleFirst published: Feb 2019
Zazzarino v 13-21 E. 22nd St. Residence Corp.When faced with a foreclosure, it’s important for boards to review their documents to determine the corporation’s responsibilities to both the shareholder and the potential purchaser. As there is likely a recognition agreement (a contract entered into by the shareholder, co-op, and lender), the board should also review its responsibilities to the lender. Boards should be proactive in dealing with the lender to make sure, among other things, that the terms of sale in the foreclosure include a provision that any purchaser at auction is subject to board approval. As an aside, we note that courts have held that where a provision of a lease requires action by the managing agent, as opposed to the board, the managing agent may take the board’s position into consideration.
Read full articleFirst published: Dec 2018
Perrault vs. Village Dunes Apt. Corp.There are some co-op proprietary leases and condo bylaws that require that certain acts of the board be reasonable or that its consent not be unreasonably withheld. These are found most often in provisions concerning alterations and the establishment of house rules, or other rules and regulations. When reasonableness language is present, the burden is on the cooperative or condominium to demonstrate that its acts were “reasonable.”
Read full articleFirst published: Oct 2018
Fairmont Tenants Corp. v. BraffThis case is a good reminder that boards can successfully challenge a shareholder’s actions, even if the shareholder has engaged in an activity that is in violation of the lease for years – even decades. This court found that, given the proprietary lease’s “no waiver” provision, the passage of time did not waive the board’s right to object. Nor did the board’s apparent knowledge of the Braffs’ using the roof waive the right to object. The board knew about it in 2007, when it forbade the couple from using the setback. Also, while the offering plan is probably not an active document anymore, the board and shareholders are still bound by the certificate of incorporation, bylaws, and proprietary lease, all of which can be relevant when trying to determine the rights of the involved parties. In this situation, the offering plan was the document that identified whether use of outdoor space was permitted by the adjacent shareholder. It showed the intent of the original drafter, and Braff failed to demonstrate that anything set forth in the plan was overridden or modified. The court thus properly considered the terms of the plan as a guide to determine whether or not the outdoor area was for the exclusive use of the Braffs.
Read full articleFirst published: Sep 2018
Avramides v. MoussaIf a shareholder or unit-owner is so dissatisfied with the way a board is acting, a derivative action is one way to deal with the situation. However, as this case reminds us, the claim cannot be brought willy-nilly. The apartment owner must ask the board to act or must prove that the board was corrupt. Courts have been attempting to determine Fletcher’s true scope ever since it was decided in 2012. In effect, Fletcher said that board members were not protected by their position if they acted improperly. In Avramides, the board’s actions – repairs to the roof and terraces – were within its business judgment, and there was no basis to hold any individual liable. In Stinner v. Epstein, another case decided by another appellate court at about the same time as Avramides, the court found that allegations that a board member had improperly received a $25,000 payment was enough to allow a claim against that member to proceed. It seems that the facts in Avramides and Stinner lie at opposite ends of the spectrum. In the former, the board did not breach its duty and thus no individual could be held accountable; in the latter, the allegation that the board member did something in his own interest to the detriment of the building was sufficient to allow the court to deny a motion to dismiss the complaint.
Read full articleFirst published: May 2018
Ran v. WeinerWhether shareholders can enforce house rules against other shareholders is not something many attorneys address directly when drafting or vetting a co-op client’s house rules. But, as this case demonstrates, it is important. Shareholders should understand that they can pursue a claim directly against a neighbor if that neighbor breaches the proprietary lease, but they must also understand the co-op/landlord’s role. This decision seems to say that the house rule would apply only if a shareholder leaked water into a common area. The co-op, as one of the parties to that specific lease, presumably could require the shareholder to pay for any damages. But the finding that shareholders cannot enforce house rules against each other would arguably apply to all house rules. Ran has filed an appeal. Assuming it goes forward, it will be interesting to see what the appellate court decides. Meanwhile, boards may want to rethink how they draft certain house rules.
Read full articleFirst published: Apr 2018
Koeppel v. 130 East End Avenue Tenants Corp.The court here addressed a provision, typically found in proprietary leases, which is prone to create problems. Certainly, financial wherewithal is important. While not before the court in this action, there can be circumstances in which a family member is financially responsible, but the board may rightly want to reject their application. The proposed shareholder may be litigious, evicted from a prior building because of disruptive or objectionable conduct, or there is something else in his or her history that would make for an undesirable neighbor. It is one thing when an apartment passes, upon death, from one spouse to the other when both have lived in the building. It is another when this provision allows an estate to introduce a completely new individual into the mix. It is for this reason that many boards, when considering whether to propose lease revisions to their shareholders, often consider revisions to this paragraph.
Read full articleFirst published: Mar 2018
Minkin v. Board Of Directors of the Cortlandt Ridge Homeowners AssociationAssessing fines may be the best way to enforce rules and policies. The declaration and bylaws were unambiguous. A court may look at the offering plan as an aid to interpretation only when governing documents are unclear or inconsistent. The declaration and bylaws are the contract between the board and owners. Finally, in the lower court decision, the court recognized that this decision would affect all unit-owners, not just the one who was a party to the suit. Although other homeowners could sue on the same theories (and could raise additional bases for their claims), for practical purposes these rulings decided the issues before the court for all homeowners.
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