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
- 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
- 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: Dec 2022
The Well-Documented Process WinsThe famous Pullman case, decided by New York’s Court of Appeals in 2003, confirmed a co-op’s right, as contained in most proprietary leases, to terminate a shareholder for objectionable conduct. Termination sometimes requires a vote by shareholders but other times only the vote of the board, as occurred here. Provided that all necessary steps in the process are followed, that there are facts showing objectionable conduct, and that there are no other indications of chicanery (a board motivated by personal gain, or acting in a legally discriminatory manner such as racial bias), the business judgment rule will insulate from judicial review the termination of a shareholder’s lease. Here, the plaintiff tried to get the court to stop the process from moving forward, which was denied. The hallmark of co-operative living is that all members of the community have agreed, by binding contract, to follow the rules or suffer the consequences, one of which is removal from the community. Whether the co-op’s termination of the lease is upheld remains to be seen, but things are not looking good for this shareholder.
Read full articleFirst published: Nov 2022
My Leaking Doors, Your Cost To FixThis fact pattern is fairly common in cooperatives. A shareholder will undertake an alteration, and the alteration agreement with the cooperative will state that the shareholder is responsible for the repair and maintenance of the new fixtures, walls, etc., and that subsequent owners will also be responsible. But decades later, when repairs are required, there is no agreement with the new shareholder in which he assumes the obligations under the alteration agreement. To make matters worse, management may not even have a file on this matter (since management often changes over the decades). Unless the proprietary lease has precise language binding the shareholder, there is little to do. It should be noted that some cooperatives require a purchasing shareholder to sign an Assumption Agreement of the prior lease, as well as executing a brand new proprietary lease. Some Assumption Agreements include language which states that the new shareholder assumes not only the old lease, but also any other agreements between the (selling) shareholder and the cooperative. This might be enough to hold the new shareholder responsible for problems with a prior alteration, but at this time the courts have not reviewed this issue.
Read full articleFirst published: Nov 2022
Fix My Condo!Newly constructed condominiums often have construction defects, and it is not uncommon for newly constituted condominium boards to sue their sponsor for contract and non-contract claims (such as fraud and fiduciary duty claims). It is equally common for the sponsor to move to dismiss those claims. In particular, sponsors and their representatives are often successful in dismissing fraud claims on the theory that those claims are really just duplicative of contract claims, but phrased in more “intimidating” language. The plaintiffs in this case were able to survive the motion to dismiss because they described specific building defects that the sponsor and its representatives were actually aware of and actively concealed or failed to address.
Read full articleFirst published: Oct 2022
You say toMAHto. I say toMAYto. The bylaws say….Voter participation matters. When it comes to board elections, an informal practice, no matter how long-standing, or widely accepted, is not controlling authority. At the end of the day, the express language of the governing documents will determine permissible board election procedure. In this case, the common interest among residential unit owners was over 70% and the sponsor’s interest was less than 30%. However, due to the residents’ reliance on past, informal voting procedures, and a lack of participation by all residential unit owners in the formal election, the sponsor’s votes, while not controlling, ultimately became determinative.
Read full articleFirst published: Oct 2022
When A Receiver Does the Board’s JobBoards must accumulate sufficient reserves to finance anticipated and unanticipated repairs to common elements, especially when individual unit owners are suffering ongoing damages. Remember, unit owners do not have the right to repair common elements on their own. Here, the court properly took the matter out of the board’s hands, but the methods employed by the receiver may be less efficient or economical than if the board had acted on its own. On top of this, the board will have to pay the receiver fees and costs associated with the job. Unit owners will not appreciate a board that ignores legitimate complaints from residents, incurs significant legal fees, needs to reimburse fees from affected unit owners, and, on top of everything, pay receiver commissions as well.
Read full articleFirst published: Oct 2022
Brightwater Towers Condominium v. Vitebsky, Zilberman and SosinaSo what can a board do to prevent a handful of dissidents from spreading nasty and often anonymous statements insinuating that it is acting improperly? Communication is the key, since the number one complaint of dissidents is that the board is not communicating with shareholders or unit-owners. Quarterly newsletters are one way to keep residents abreast of the operations of the building and the decisions of the board. But the best way may actually have been provided by the pandemic — virtual meetings. The sniping by a few owners most likely have very little effect if all residents hear directly from the board, and often.
Read full articleFirst published: Sep 2022
I Am Who I Say I AmThis is one of the first cases, if not the first, interpreting the language now codified in the recently enacted NPCL and BCL amendments allowing for board elections to have electronic voting, including voting by email and other electronic means. If this case is any indication of future decisions (and it is my bet that it is), courts will uphold board discretion as to the implementation of safeguards in electronic voting. Boards will likely have broad discretion in enacting safeguards in electronic voting. While boards should enact safeguards, they should be mindful of ensuring that the burdens do not prohibit voting by certain segments of shareholders.
Read full articleFirst published: Sep 2022
Endless RenovationsIf the duration of an alteration project is of concern to a board of a cooperative or condominium, care should be taken to ensure that all material information, including the specific deadline and consequences for failure to meet it, are clearly spelled out in the agreement. Even a seemingly minor mistake or unintentional oversight can have major consequences and a potentially significant impact on building operations.
Read full articleFirst published: Sep 2022
Lifesavers Bldg. Homeowners Group v. Bd. of Mgrs. of the Landmark CondoTAKEAWAY This is one of the first cases, if not the first, interpreting the language now codified in the recently enacted NPCL and BCL amendments allowing for board elections to have electronic voting, including voting by email and other electronic means. If this case is any indication of future decisions (and it is my bet that it is), courts will uphold board discretion as to the implementation of safeguards in electronic voting. Boards will likely have broad discretion in enacting safeguards in electronic voting. While boards should enact safeguards, they should be mindful of ensuring that the burdens do not prohibit voting by certain segments of shareholders.
Read full articleFirst published: Sep 2022
Brodie v. Board Of Managers Of The Aldyn CondominiumTakeaway If the duration of an alteration project is of concern to a board of a cooperative or condominium, care should be taken to ensure that all material information, including the specific deadline and consequences for failure to meet it, are clearly spelled out in the agreement. Even a seemingly minor mistake or unintentional oversight can have major consequences and a potentially significant impact on building operations.
Read full article