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
- Appeals
- Arbitration
- Assessment
- Attorney Fees
- Attorney-Client
- Authority to Sue
- Balcony/Terrace Rights
- Bike Lane
- Board of Directors
- Books and Records
- Breach of Lease
- Business Judgment Rule
- Bylaws
- Bylaws/House Rules
- Certificate of Occupancy
- Charges/Fees
- Commercial Unit
- Common Element
- Common Elements
- Companion Animal
- Constitutionality
- Construction Defects
- Contracts
- Conversion
- Defamation
- Discovery
- Discrimination
- Due Diligence
- Easement
- Elections
- Estate
- Eviction
- Eviction/Termination
- Fiduciary Duty
- Fines
- Foreclosure
- Fraud
- Governance
- Gym
- House Rules
- Indemnification
- Indemnification/Subrogation
- Injunction
- Insurance
- Labor Law
- Liability of Directors
- Licenses
- Liens
- Maintenance
- Malpractice
- Management
- Mechanic's Lien
- Mediation
- Misrepresentations
- Motion Practice
- Motion Practive
- Negligence
- Notice of Pendency
- Nuisance
- Occupancy Agreement
- Ownership
- Parking
- Partnership
- Personal Injury
- Pets
- Property Damage
- Proprietary Lease
- Reasonableness
- Receivership
- Release
- Repairs
- Representations
- Sales
- Service of Process
- Sponsor
- Statute of Limitations
- Stock/Shares
- Stocks/Shares
- Sublets
- Succession Rights
- Tax
- Third-Party Liability
- Transfers
- Trespassing
- Trial Practice
- Violations
- Warranty of Habitability
- Yellowstone Injunction
- Zoning
First published: Sep 2002
Matter of Fort Hamilton Development Corp. v. Bay Ridge Towers Inc.In the court's view, the petitioners' attempt to distinguish Visutton from their case was unavailing. The restrictive provision at issue in Visutton was virtually the same as the one in the present case. The court also dealt with the petitioners' argument that Flagg was distinguishable from the case at bar merely because the restrictive provision therein stated that the sponsor shall have the right to elect three of seven directors and did not specifically refer to the number of directors Fort Hamilton may elect. It said it was without merit. The offering plan in Flagg stated that the sponsor or holder of unsold shares "will not elect a majority of the Board of Directors" and, here, Article II, Section 2, of BRT's bylaws similarly stated that a shareholder of more than 50 percent of BRT's shares (i.e., the sponsor and holder of unsold shares) cannot "elect a majority of the Board of Directors." Thus, the court concluded that such provisions were indistinguishable. Petitioners also argued that the inspectors exceeded their authority and violated BCL Section 612(a). BCL Section 612(a) provides that "[e]very shareholder of record shall be entitled at every meeting of shareholders to one vote for every share standing in his name on the record of shareholders, unless otherwise provided in the certificate of incorporation." They contended that under this section, the subject restriction in Article II, Section 2, of BRT's bylaws was unenforceable since it was not contained in BRT's certificate of incorporation. The court rejected this argument. While a restriction depriving a shareholder of the right to vote all of his/her shares can only be accomplished through a provision in the certificate of incorporation, the appellate division, second department, in Visutton, held that a provision restricting a sponsor from voting its unsold shares for more than one less than the majority of directors to be elected is not required to be set forth in the certificate of incorporation. This is because such a provision "do[es] not prohibit the sponsor from voting all its shares; [it] merely bar[s] the sponsor from obtaining control of the board under certain circumstances." . Petitioners further contended that the inspectors' refusal to count the ballots cast by Fort Hamilton while counting the ballot cast by Marine Properties LLC, which was also a holder of unsold shares, was arbitrary, capricious, and unlawful. The court said that such contention was devoid of merit. While it is undisputed that Fort Hamilton owns greater than 50 percent of the shares of BRT, Marine Properties LLC owns only 4.39 percent of the shares of BRT, and has never held 50 percent or more of the shares of BRT. Therefore, since the subject bylaw only applied to any "shareholder who owns greater than 50 percent of the shares of [BRT]," it was plainly inapplicable to Marine Properties LLC.
Read full articleFirst published: Sep 2002
Dorsey v. Hawthorne Garden Owners Corp.Contrary to popular belief, neither an existing co-op nor a condo is required to incur unreasonable expenditures to make its building handicapped-accessible. Case law reveals that accommodations for handicapped persons are not required if they impose undue financial burdens or require fundamental alterations. Of course, newly constructed buildings are required to provide handicapped accessible facilities since such facilities can easily be accommodated within a new construction budget.
Read full articleFirst published: Jul 2002
Schultz v. 400 Cooperative CorporationThis reversal of the lower court decision reported earlier last year in Habitat leaves little support for shareholders seeking a reallocation of the shares for a co-op apartment. A different result is difficult because of the frequent passage of considerable time since the alleged improper share allocation was made, the deference given to board decisions under the business judgment rule and the adverse impact on all other shareholders of a co-op if a reduction in a share allocation is granted many years later.
Read full articleFirst published: Jul 2002
David v. AbramsonAdverse possession is often tough to prove. The law is careful to prevent changes in ownership of real estate to be based only on the concept of abandonment. Obtaining title to a co-op apartment by adverse possession is rare and difficult. It does not seem likely that the plaintiff in this case will prevail. However, the case will turn on all of the facts presented to a court for decision.
Read full articleFirst published: Jun 2002
In the Matter of Richard D. HuttnerThis matter is a reminder to judges serving on co-op or condo boards that their judicial responsibility is paramount and that they should recuse themselves in dealing with third parties, particularly where these dealings are adverse and may lead to or involve litigation. This appears to be a rare situation.
Read full articleFirst published: Jun 2002
Seif v. 72 Horatio Street Owners Corp.This case illustrates the fiduciary duties that a co-op or condo board has to treat all unit-owners fairly. Decisions made by boards, which are imposed in fact only on a limited number of unit-owners, are always suspect and subject to challenge. Moreover, fair notice of any impending change in the basic co-op or condo affairs or documents is clearly essential if the change is to withstand challenge. Unfairness to minority shareholders often prompts judicial relief.
Read full articleFirst published: Apr 2002
Northeast Restoration Corp. v. K&J Construction Co.This case construes a section of the state's Condominium Act dealing with the right to file a mechanic's lien. Because of the unique nature of condominium ownership when first introduced in New York by statute in 1964, special provisions were provided to reconcile the new law with existing laws including the lien law. The case, which is consistent with several prior cases, holds that a mechanic's lien must state with specificity the units to which it attaches and may not be on the common elements as required by the provisions of the Condominium Act. Such provisions are construed to facilitate the objectives of condominium ownership.
Read full articleFirst published: Apr 2002
Farnsworth v. WellsThe result here was predictable. There was no proof that the wall had been moved. Also, the plaintiff waited a long time to pursue this claim. As a result, the sympathy of the court was not invoked. Indeed, other defenses such as laches, waiver, and estoppel probably could have been raised by the defendant to support dismissal of the claim.
Read full articleFirst published: Mar 2002
Lambs, Inc. v. DivenThis is another in a long line of cases seeking to construe the nature of co-op ownership. In considering the dual nature of co-op ownership, a mixture of personal and real property, the court here concluded, for purposes of determining how a co-op was treated in a statutory homestead exemption from a legal attachment situation, that it was to be treated as real property. The reason: co-op shares represented the right to occupy and reside in real property. Despite this conclusion, the court refused to afford any relief to the petitioners on the ground that they had selected the wrong forum, an error that could be corrected by another lawsuit in a court of appropriate jurisdiction.
Read full articleFirst published: Mar 2002
Seward Park Housing Corp. v. CohenThe subject of pets continues to be a troublesome one for the courts. This lengthy decision should help to resolve some of the uncertainty that has prevailed, although it applies only to pets in Manhattan and the Bronx. The last word on this subject, of course, lies with the court of appeals, which may be needed to resolve disputes between the two appellate divisions, which govern New York City. In any event, the result of this case is to make it more difficult for a co-op to enforce no-pet rules. Indeed, the case is a warning to co-ops that they must act promptly (within 90 days) and by appropriate legal action to challenge an unauthorized pet.
Read full article